Galeria Karstadt Kaufhof has filed for bankruptcy again. For the third time in recent years. How the procedure works in this case.
This is record-breaking: the Galeria department store chain has filed for bankruptcy for the third time since April 2020. Once again, employees, suppliers, other creditors and the state must expect heavy losses. The reason this time: the previous bankruptcy of Galeria owner Signa, the group owned by real estate juggler René Benko.
There are no restrictions in Germany on how often a company can file for bankruptcy. Filing for bankruptcy does not mean that the company will be wound up as long as certain conditions are met: there must still be assets (“mass”) that can be distributed. In addition, the creditors must agree to an insolvency plan, i.e. a concept of how the bankrupt company can restructure itself and how much of their money they will get back (“quota”). An insolvency expert appointed by the responsible local court oversees the process.
The Galeria case involves significant amounts
When the procedure is opened, the Federal Employment Agency (BA) covers the employees’ salaries for three months. In the case of Galeria, this involves significant amounts given the high number of employees: in 2020 it was 125 million euros, in 2022/2023 almost 100 million euros. The insolvency benefit is financed through a levy among all employers. This means that other retailers also have to pay for Galeria.
There were concerns among experts as to whether the department store group would be entitled to insolvency money again so soon after the end of the previous proceedings. The BA had already rejected payments in similar cases. At Galeria, however, a different decision was made “after intensive consultations”.
Source: Stern
