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The KaDeWe Group is insolvent, but has reported record sales for 2023. At the same time, traders wait loudly rbb still waiting for their Christmas sales to be paid out. It could also be very expensive for the state.
Business continues and no employees have been laid off so far after the KaDeWe Group filed for bankruptcy at the end of January. But it is still unclear what the situation is actually like for the luxury department stores in Berlin, Hamburg and Munich. And some retailers are becoming increasingly frustrated.
For example, in Berlin’s “Kaufhaus des Westens” some retailers are still waiting for their money from the Christmas business. “We are waiting for almost 100,000 euros that KaDeWe owes us,” says Hamid Djadda, who is a co-partner of OHDE Berlin Marzipan. The company has a stand in KaDeWe, but you can pay for the goods at all checkouts in the department store.
“A month later, KaDeWe transferred the money,” says Djadda. But none have come since mid-December. He and many other affected people were missing the most important profits from the Christmas business, he says. “This is a threat to the existence of a company like OHDE and other family-run, smaller companies.” KaDeWe does not wish to comment on individual cases.
Sales reporting as a “flight forward”?
The “Kaufhaus des Westens” in Berlin, together with the Alsterhaus in Hamburg and Oberpollinger in Munich, belongs to the KaDeWe Group, which is almost half owned by the also insolvent Signa Holding of the Austrian investor René Benko.
Since the bankruptcy announcement, the KaDeWe Group has tried to send positive messages: The company announced this week that 2022/23 was the highest sales year in the company’s history. At almost 728 million euros, sales were almost 24 percent higher than the pre-Corona year 2018/19.
However, one should not rate this report too highly, says Christoph Niering, chairman of the professional association of insolvency administrators, VID. “Sales do not equal profits and therefore say nothing about profitability.” It is not unusual for companies in this situation to “fly forward” with such a message.
None since 2016 Annual financial statements published
What the actual status of the company is remains unclear. The KaDeWe Group published its last annual financial statements in 2016. According to information from rbb24 The company has apparently been violating disclosure requirements since then. Upon request, the KaDeWe Group has now reported that it has submitted the business transactions that have been missing since then to the Federal Gazette, where they should be “publicly viewable in a timely manner”.
The state granted the company a guarantee in 2020, which could now cost taxpayers millions. This is about a loan of 90 million euros, which the KaDeWe Group says it received from BNP Bank “in connection with the months-long forced closures of our stores during the Corona pandemic”.
The federal government, Berlin and Hamburg are liable for 90 percent
One condition for this loan was that the federal government and the states of Berlin, Hamburg and Bavaria would cover 90 percent of the sum in the event of default. With the insolvency of the KaDeWe Group, this guarantee could now become due: “I assume that the company does not have any collateral of the appropriate size for the loan. Otherwise it would not have needed a guarantee,” says insolvency administrator Niering.
The KaDeWe Group reports that the guarantee has not yet been used. The loan is being repaid as scheduled and the company has “made repayments to the lender in the relevant amounts.” The company did not answer exactly what sums were involved.
If the federal government has to step in, it will cover half of the outstanding payments, and the three federal states involved will share the other half. According to the Berlin Senate Department of Finance, the shares are divided according to a specific distribution key – for example according to the number of employees.
Dealers in KaDeWe rely on their own cash registers
Niering estimates the likelihood that the state will get this money back in the insolvency proceedings to be rather low. “As a rule, state guarantees are not secured. Unsecured creditors only receive quotas in the single-digit range, especially in the event of the insolvency of commercial companies,” said the insolvency administrator.
Hamid Djadda from OHDE Berlin Marzipan also has to be prepared to only get back a fraction of the 100,000 euros that the KaDeWe Group still owes him. However, he did not stop the sale of his goods. Instead, like many other retailers, he relies on his own cash registers – and thus protects himself from the risk of having to file for bankruptcy himself at some point.