Galeria Karstadt Kaufhof: The insolvency proceedings have been opened

Status: 01.02.2023 1:40 p.m

Insolvency proceedings under self-administration have begun at the Galeria department store group. Management only gives vague information about how to proceed. The anxious wait for the employees continues.

Many had expected that with the opening of the bankruptcy proceedings, there would be more clarity about Galeria’s future. But the management of the department store group with the general representative Arndt Geiwitz, an auditor from Neu-Ulm, and the administrator Frank Kebekus, a lawyer from Düsseldorf, did not name any locations in a message to the employees. It is said that details will be announced in March at the earliest.

Uncertain future for department store group Galeria Kaufhof

Marion Kerstholt, WDR, daily news 12:00 p.m., February 1, 2023

Rent waiver to save the locations?

Until then, talks must be held with the property owners in each individual location – particularly with regard to the question of how far rents can be reduced. Geiwitz says in a press release:

As part of the renovation, Galeria will also reorganize its branch network. The company is currently negotiating with landlords. In particular, their concessions often still depend on which specific branches can be closed, continued or possibly transferred to a buyer.

In an interview with the “Lebensmittelzeitung” he had indicated that in individual cases landlords would have to forego half their rents so that the respective location could be maintained.

Assortments tailored to regional needs

There is now talk of a “restructuring concept” that will position Galeria more clearly in the future – with a range that is more geared towards local needs.

In concrete terms, this means that the sales area is to be divided into five regions. The regional managers should be given the freedom to tailor the range to local needs. “If, for example, there is a top household goods retailer in the vicinity of a Galeria branch that you can’t beat, then you can throw out the range of household goods in order to make better use of the space, for example for toys,” says Geiwitz.

All existing Galeria branches are to be modernized and converted to the concept, he adds today. The attractiveness of the locations is increased by the “sensible integration of other customer-related services such as insurance, tailoring, cleaning or citizen services”. This approach has already proven itself in the model branch in Kassel.

Investor Benko offers capital

The Galeria owner Signa, headed by the Austrian investor René Benko, is also prepared to provide 200 million euros in capital if the insolvency plan goes through. Geiwitz confirmed that.

A step that the ver.di trade union has urged as urgent: “Appropriate investments by the investor Benko are necessary. And it will be important that he takes responsibility for the future of the department stores and for the future of jobs and thus for the people at Galeria,” ver.di national board member Stefanie Nutzberger told the daily News.

Massive job cuts expected at headquarters

Galeria employs a total of 17,400 people. There will be massive job cuts at the Essen headquarters, Geiwitz leaves no doubt about that. The situation of the branches is to be assessed differently from location to location – depending on whether it is continued by Galeria, taken over by an investor or closed completely.

Employees who have to leave the company should receive a severance payment of two months’ salary, up to a maximum of 7,500 euros. The chairman of the general works council, Jürgen Ettl, confirmed this to the “Handelsblatt”.

The creditors now have until March 6 to assert their claims. Major creditors include the Federal Employment Agency, the Economic Stabilization Fund, banks and landlords. Suppliers are not so badly affected because most of their goods are protected by retention of title.

Habeck excludes further state aid

Federal Minister of Economics Robert Habeck made it clear today that there will be no further state aid as during the pandemic. During the Corona period, the federal government supported Galeria Karstadt Kaufhof twice with a total of 680 million euros.

“It was in the company’s interest that the city centers be preserved. I don’t think the company is being offended if you say that there are still structural problems that could not be resolved during this support phase.” These structural problems have now led to these insolvency proceedings, according to Habeck. “But this is now happening without the participation of the federal government.”

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