The insolvent department store chain Galeria Karstadt Kaufhof (GKK) wants to get started again with a new owner. Germany’s last large department store group has filed for bankruptcy for the third time in three and a half years as a result of the difficulties faced by its owner Signa. As the company announced on Tuesday in Essen, discussions with potential investors have begun.
Galeria has filed for insolvency at the Essen district court. The more than 15,000 employees now have to fear for their jobs. It is not yet clear whether further locations will have to close. According to the company, business in the branches should continue to run normally. A spokesman for the Federal Ministry of Economics in Berlin said the ministry was in contact with the department store chain. New state aid is not a topic of discussion.
“Galeria’s operational success is burdened by the framework conditions of the old ownership structure. We expressly see today as a liberation,” said Galeria boss Olivier van den Bossche. “The Signa Group’s insolvencies are causing massive damage to Galeria, hindering ongoing business and severely restricting future development opportunities through high rents and expensive services.”
Looking for investors for Galeria Karstadt Kaufhof
The provisional Galeria insolvency administrator Stefan Denkhaus said that an investor process for the company would be started at very short notice. The aim is “that we can exit this insolvency procedure again within a time frame of seven or eight months”. There are already interested parties: “We will approach other interested parties. Those who are already interested can take part in this process.”
This is the third bankruptcy for GKK within three and a half 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.
Uncertainty over millions in payments from Signa
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.
15,000 employees hope
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 then wants to continue to operate 92 department stores. Of the more than 15,000 people the company says it employs, most are permanent employees, while a smaller number are temporary workers.
The Federal Employment Agency will pay insolvency money to employees of the Galeria Karstadt Kaufhof department store chain if the requested insolvency proceedings are opened. This is the result of consultations with the company and a detailed examination of the requirements, according to a statement from the authority. Insolvency money is paid retroactively for up to three months after the opening of insolvency proceedings, usually in the amount of the last net income. The employees do not have to do anything at the moment, according to the statement.
A spokesman for the Federal Ministry of Economics said that Galeria’s current economic development and possible effects of the Signa bankruptcy were being closely monitored by the ministry. Furthermore, the Ministry of Finance is in charge, as previous support has come from the Economic Stabilization Fund.
Verdi wants to fight
The Galeria general works council could not initially be reached for a statement. The Verdi union has called on the new insolvency administrator to secure the department store chain’s jobs. “We as a union will fight with the employees for their future,” said Silke Zimmer, who is responsible for trade on the Verdi federal board. “We demand that the new insolvency administrator do everything in his power to ensure that the good economic development that the company has enjoyed in recent months can be continued.”
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.
In the current insolvency application, Galeria Karstadt Kaufhof GmbH did not choose a protective shield, but rather a standard insolvency procedure, unlike in 2020 and 2022. The management remains in office during the proceedings, 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.
This article appeared first which, like stern, is part of RTL Germany.
Source: Stern
