When will Galeria’s fate be decided?

Galeria Karstadt Kaufhof continues to expect losses. At the same time, the company is waiting for money from the insolvent owner Signa. When will the future of the department store chain be decided?

Things seem to be difficult for Galeria Karstadt Kaufhof on its own. The department store company expects a loss in the lower double-digit million range for the current financial year. This is what it says in Galeria’s 2022 annual financial statements, which have now been published in the Federal Gazette.

This makes the cash injection that the Austrian Signa Holding promised in Galeria’s second insolvency proceedings seem all the more important. 200 million euros should flow. This support would be essential for Galeria, says retail expert Gerrit Heinemann from Niederrhein University of Applied Sciences. “The money should be paid in stages, the first 50 million in February. They’re not coming. Galeria still has a cash-out due to massive losses. And liquidity is needed, which isn’t there.”

Real estate is probably overvalued

Heinemann does not believe that Signa Holding can keep its promise. The group’s real estate is still overvalued. The creditors are also trying to get an idea of ​​how much money is still in Signa. They will make the final decision on the restructuring plan on February 12th.

This stipulates that creditors receive 30 percent of their claims. In order to raise money, Signa is currently selling many assets, including curiosities such as expensive wristwatches. Basically, Cornelia Wesenauer from the creditors’ association AKV sees this as a positive sign – “that they are signaling to creditors that they are really in the process of shrinking healthily.”

In the end the money could be gone

Everything is already being liquidated, exploited and converted into money, which will then be made available to the creditors as part of the restructuring plan. “However, if the restructuring plan is not accepted because the majority of creditors speak out against it, this will of course be the first steps towards a bankruptcy and liquidation process,” points out Wesenauer. If the creditors reject the restructuring plan, Signa will probably have to be wound up.

It is extremely questionable whether any money would then flow to Galeria. The sale of the real estate, for example, is likely to primarily benefit the banks that financed the houses, according to retail expert Heinemann: If, as with Signa, loans or mortgages are granted by banks in the real estate sector, they are first-class or secured as a mortgage, “so that “doesn’t even go into the insolvency estate”. If you add that up, there isn’t much left.

Is Benko liable with his private assets?

The question remains to what extent Signa founder and billionaire René Benko can be held liable with his private assets. He holds the largest shares in Signa through foundations. This could mean that Benko is financially responsible, according to Wolfgang Peschorn, head of Austria’s financial procuratorate, which represents the state’s creditor interests, including in the Signa case.

“Signa Holding is owned by private foundations. That’s where you have to look,” says Peschorn. “And of course you also have to ask yourself the question, when someone travels from A to B with a company jet, whether that was necessary for operational reasons – or whether there are claims and demands from the bankrupt’s estate against someone like that.”

However, these would probably have to be fought for in lengthy processes. This is bad news for Galeria Karstadt Kaufhof, which continues to make losses. As the “Süddeutsche Zeitung” reported last week, the next bankruptcy is already in preparation.