Germany’s last large department store group, Galeria Karstadt Kaufhof, is again filing for insolvency proceedings. It is the third in just a few years. It is unclear what will happen to the 90 department stores and more than 15,000 employees.
The department store chain Galeria Karstadt Kaufhof (GKK) has filed for insolvency at the Essen district court. The company announced this in Essen. Galeria is therefore looking for a new owner. Discussions with potential investors have already begun and the aim is to continue Galeria.
Galeria boss Olivier van den Bossche said: “Galeria’s operational success is burdened by the framework conditions of the old ownership structure. We expressly see today as a liberation.” The statement continues: “The Signa Group’s bankruptcies are causing massive damage to Galeria, hindering ongoing business and severely restricting future development opportunities through high rents and expensive services.”
Uncertainty over millions in payments from Signa
This is the third bankruptcy for GKK in less than four years. This was preceded by the difficulties of the parent company Signa. In the past few weeks, several companies from the trading and real estate group of the Austrian entrepreneur René Benko have filed for bankruptcy – including Signa Retail Selection AG, to which GKK belongs. At the end of November it announced that it would wind up its business in an orderly manner, which would mean selling GKK.
Germany’s last large department store group only had to seek rescue in protective shield proceedings at the end of 2022. In March 2023, the creditors’ meeting approved the insolvency plan. Signa had promised 200 million euros for the renovation, which should flow in several tranches until 2025, the first 50 million reportedly in February.
It is still unclear whether GKK can expect payment. Austrian insolvency expert Karl-Heinz Götze from the creditor protection organization KSV1870 does not assume this. However, he did not know the relevant payment agreements, emphasized Götze, whose organization is represented in the creditors’ committee of the holding company’s insolvency. The insolvency administrator of Signa Holding did not want to comment on this when asked.
Fears for more than 15,000 jobs
After the previous bankruptcy, the department store group had to close around 40 branches. The last 18 of them will close later this month. Galeria currently operates 92 department stores and claims to employ more than 15,000 people.
It is not yet possible to say what the new bankruptcy filing means for the employees. The general works council could not initially be reached for a statement. During the last insolvency proceedings, the Federal Employment Agency paid Galeria employees insolvency money for three months.
In the two previous insolvency proceedings, Galeria’s creditors had waived claims worth billions so that the department store chain could find a way out of the crisis. The German state also helped with a lot of money: in 2021 and 2022, the Economic Stabilization Fund (WSF) helped the company with a total of 680 million euros. According to the insolvency plan from spring 2023, the WSF should only receive a small part from the utilization of the inventory.
This time Galeria Karstadt Kaufhof GmbH has applied for regular insolvency proceedings. A provisional insolvency administrator is appointed by the court. The management remains in office, but all transactions require the approval of the provisional insolvency administrator. He must prepare an expert opinion as to whether the reasons for filing for insolvency exist and whether the costs of the procedure are covered. If the requirements are met, the procedure is opened. An insolvency plan can be drawn up either now by the management or after the opening of proceedings by the insolvency administrator.
Source: Stern
