A French court granted bankruptcy protection on Monday to iconic department store BHV Marais, which has stood in central Paris for around 170 years. The move comes after the company announced last week that it sought bankruptcy protection to safeguard its operations and jobs as part of a "relaunch".

The Paris court on Monday granted bankruptcy protection to SEGM BHV, which notably includes the store opposite Paris City Hall and another west of the capital, according to a court document seen by AFP.

SEGM BHV, which employs 660 people, said it posted a net loss of €1.85 million ($2.1 million) last year on revenues of €170.3 million.

The retailer "is in a state of insolvency, notably due to a significant drop in turnover, excessive liabilities and disputes with the landlord", the document said.

Both management and trade unions had requested that the retailer be placed in bankruptcy protection, with the unions saying the company was unable to make payments. Management had disputed that contention.

The court-supervised restructuring allows for a six-month observation period – renewable for a further six months – to assess whether the company can be turned around. BHV's management said it "welcomed" the court's decision.

"The protection afforded by the Commercial Court should very quickly enable us to finalise discussions with Brookfield, the property owner, which we have been awaiting for several months," it said on Monday. BHV Marais would remain open, the company added.

Controversial partnership BHV sparked controversy last year over a partnership with Asian fast-fashion giant Shein, which in November opened its first permanent physical shop in BHV's flagship store. The move sparked outcry over the brand's fast-fashion business model and its environmental impact, as well as its online sale of childlike sex dolls.

BHV Marais announced an end to the partnership in June after its operating company sold the landmark Paris outlet to a group of its managers, who promptly parted ways with Shein.

The deal had struck a raw nerve with a French public concerned about the disappearance of local jobs amid a flood of Asia-manufactured imports and triggered the departure of a number of brands.

The store's previous owner already had problems with brand-name boutiques it hosted, over payment delays before the Shein controversy.

The new owners said that as part of that deal the ownership of part of the building was transferred, but that they had yet to receive the funds, which adversely affected their plans to revamp the business.

The owner of the building, Canadian asset manager Brookfield, rejected that assertion, saying it does not have any outstanding sums due to BHV Marais.

Trade union representatives said their request that the company be placed under bankruptcy protection didn't mean they supported the current management. Their lawyer said they would use it to push for it to be taken over.

The Paris deputy mayor for employment, Nicolas Bonnet-Oulaldj, said he would be meeting soon with representatives of Brookfield and would encourage them to back a viable business plan, in line with the city's character and one that supports local brands and employment.