2nd UPDATE: Burani's Creditors Meet Ahead Of Court Date-Sources

ROME (MF-Dow Jones)--Creditor banks owed at least EUR492 million from struggling Mariella Burani Fashion Group (MBFG.MI) will meet Thursday to discuss ways for the clothing manufacturer to avoid bankruptcy, people with knowledge of the situation said Wednesday.

The meeting has been scheduled ahead of a hearing expected on Jan. 27 at which a judge will examine whether one of the holding companies controlling the firm must file for insolvency after it burned through all its shareholders' equity and accumulated overdue loans of around EUR20 million.

An insolvency filing by one of the holding companies could place the entire group at risk.

The clock is ticking for Mariella Burani's survival, since the complexity of the company's maze of holding companies makes it unlikely that creditors and shareholders can find an agreement before the court date next week, one of the people said.

And even if creditors and the company do manage to come to an agreement, mergers and acquisitions specialists say privately the few buyers around for fashion brands or apparel manufacturers right now will only pay a low price.

IT Holding, a competitor that is in bankruptcy protection, is also looking to sell brands.

Marcella Burani controls Antichi Pellettieri SpA (AP.MI), a separately listed company that owns the Mandarina Duck and Coccinelle brands. It had revenue of EUR258.7 million in the first nine months of last year, down 10.3%.

The company has foundered recently after the controlling shareholder, the Burani family, failed to set up a EUR50 million escrow account as requested by its creditor banks, to be used to fund the company's planned capital increase, which is expected to be completed by Feb. 12.

It's not clear how much debt the Burani companies actually hold.

The Burani galaxy, including the three holding companies controlling the Mariella Burani Fashion Group and the family's other listed companies such as Bioera (BIE.MI) and Greenvision Ambiente SpA (VIS.MI), has up to EUR1 billion debt, another person with knowledge of the situation said Wednesday.

The market capitalization of MBFG and its three listed units was EUR156 million at market close on Wednesday. Last week, Mariella Burani said the total debt of the Burani family's four listed companies was EUR633.1 million. MBFG's debt alone was EUR492 million at the end of November.

Burani's creditor banks, of which UniCredit SpA (UCG.MI) and Intesa Sanpaolo SpA (ISP.MI) are the largest, are going to discuss Thursday if it makes sense to begin a legally binding procedure called a "concordato preventivo," or creditors' agreement. The agreement sets out binding conditions pledged by the company about how debt is to be repaid.

The procedure, aimed at avoiding bankruptcy, is quite complicated and will be almost impossible for the company to complete before the date of the hearing next week.

-By Gabriele La Monica, with MF-Dow Jones, and Chiara Vasarri, Dow Jones Newswires; 39 06 6976 6923; [e-mail]

(Sabrina Cohen in Milan contributed to this article)