Status: 03/27/2023 3:55 p.m
Galeria Karstadt Kaufhof will not be broken up. The creditors approved the recovery plan for the badly hit department store chain. Nevertheless, thousands of employees will lose their jobs.
Germany’s last major department store chain, Galeria Karstadt Kaufhof, gets another chance. The group’s creditors’ meeting approved the plan by the restructuring expert Arndt Geiwitz and the company’s management to save the house, as Galeria announced.
For the creditors, the approval means giving up a large part of the money that the department store group still owes them. Overall, according to media reports, suppliers, landlords and other creditors have to forego more than one billion euros. But despite the high financial losses, they had little choice but to agree to the plan.
If the insolvency plan had been rejected, they would probably not have seen any of their money at all. If they continue, they can at least expect a small part of their claims to be paid, also thanks to a grant worth millions from owner René Benko.
“Best chances for a return to the road to success”
Geiwitz said the restructuring plan and the concept of the department store of the future gave Galeria Karstadt Kaufhof “the best chance of getting back on the road to success”. It is crucial that the concept is implemented quickly and consistently by the management and the owners.
Trustee Frank Kebekus said that a rejection of the insolvency plan would have had catastrophic consequences for the group. Then, according to him, the closure of all branches and the termination of all employees would have been unavoidable.
Job cuts also hit remaining houses
But even with the adopted restructuring plan, 47 branches are to close, which means that more than 4,000 of the approximately 17,000 employees will lose their jobs. And: the job cuts not only affect the closing branches, but also the group headquarters in Essen and the remaining department stores. Because many of them are to be downsized.
At the end of last year, Galeria Karstadt Kaufhof sought rescue in a protective shield procedure for the second time in three years. The group cited the consequences of the corona pandemic and the war against Ukraine as reasons.
A first protective shield procedure, which was initiated in 2020 during the first corona lockdown, brought only temporary relief to the company, despite the closure of around 40 branches, the loss of around 4,000 jobs and the cancellation of more than two billion euros in debt.