Struggling Italian fashion house Trussardi SpA is nearing a deal that will see it transferred to a new owner and have assets sold off as part of a debt restructuring.

After an extended marketing process that saw little demand, the brand, together with some of the group’s branches, is set to be sold to Miroglio Group, a manufacturer and distributor of ready-to-wear products, said people with knowledge of the matter who spoke to Bloomberg on condition of anonymity.

Proceeds will be used to repay existing creditors, the people said. The deal won’t encompass all Trussardi stores, with several shops set to shut down, said the people.

While Trussardi has been struggling for years, the lack of interest shown by potential suitors in relaunching the brand comes amid signs that the luxury bubble created during the pandemic has burst. Burberry Group Plc has slashed its profit forecast, following in the footsteps of its bigger rivals Richemont, LVMH and Kering SA, as demand in key areas such as the US and China weakened.

The firm is currently owned by QuattroR, an Italian turnaround fund that bought the company in 2019. It sells clothing and accessories, including belts, bags and wallets, for both men and women.

Representatives for Trussardi, QuattroR and Miroglio declined to comment.

A transaction would have to get approval from the Italian court overseeing Trussardi’s restructuring process.

For Trussardi, its exposure to Russia was one of the factors that pushed it into a restructuring, as sales in the country came to a halt following the invasion of Ukraine in early 2022 and the subsequent imposition of sanctions.

By Luca Casiraghi and Giulia Morpurgo