The creditors’ meeting will decide on the future of the department store company. If it approves the rescue plan, the creditors will have to forego a lot of money.
Insolvency administrator Stefan Denkhaus has recommended that the creditors of Galeria Karstadt Kaufhof vote today for the plan to restructure the department store chain. “I am convinced that Galeria has a good future with this management and the new investors. That is why I recommend that the creditors accept the plan,” said the specialist lawyer for insolvency and restructuring law. The alternative would be to break up the company.
The creditors’ meeting will meet at the Essen trade fair to vote on the insolvency plan drawn up by Denkhaus, which is intended to bring the company back on track to success. The result is expected to be known in the afternoon; the event is not public.
Claims amounting to EUR 886.1 million
The creditors include landlords, suppliers, the tax office and the Federal Employment Agency, which paid insolvency benefits to employees. In recent weeks, claims totaling 886.1 million euros have been filed. The insolvency plan requires creditors to forgo a large part of their money.
Galeria’s restructuring company Denkhaus expects an insolvency rate of 2.5 to 3 percent. The rate determines the share of the money owed that creditors will get back if the plan is accepted. But it may also be a little more. Payments from claims against the previous owner, the Signa Group of entrepreneur René Benko, could increase the rate even further, according to Denkhaus.
Experts are confident that the plan will be accepted. “Anything other than approval would be a huge surprise. The creditors have to make concessions, but actually have no other choice,” said Jörg Funder, professor of business management in retail at Worms University. No one would benefit from a rejection of the plan and a general insolvency. The creditors would then face a total loss and Galeria would be broken up.
What would happen after the creditors’ meeting
The plan also stipulates that a consortium consisting of the US investment company NRDC and the investment company BB Kapital SA of the entrepreneur Bernd Beetz should take over Galeria. As part of the insolvency proceedings, the company will shrink again. By the end of August, 16 of the 92 department store branches are to close. 1,400 of the approximately 12,800 employees will lose their jobs.
Before the vote, Verdi negotiator Marcel Schäuble again demanded a viable future plan from the new owners. “Above all, sufficient investment is needed to secure the department store concept, locations and jobs in the long term,” he said. “Branch closures and cost-cutting programs do not lead to a successful realignment, as the past has shown.”
If the creditors agree to the insolvency plan, it must be confirmed again by the court. The insolvency proceedings can then be lifted. Denkhaus wants to hand the company over to the new owners by the end of July. Galeria filed for insolvency at the beginning of January. This is the third insolvency within three and a half years.
Source: Stern
