"Thanks for nothing!"

Creditors approve insolvency plan for Galeria

(Bild: APA/dpa/Fabian Strauch)

The German department store chain Galeria Karstadt Kaufhof, previously part of the Signa conglomerate of the fallen Tyrolean real estate investor René Benko, has cleared the last major hurdle to its rescue. The creditors' meeting at Messe Essen on Tuesday approved the restructuring plan, as announced by insolvency administrator Stefan Denkhaus. The department store group is to continue under new ownership. However, not in all stores. 1400 employees will be made redundant. 

Formally, the insolvency proceedings are about to be concluded with the acceptance of the restructuring plan. After the end of the objection period, the competent Essen district court can terminate the proceedings in June. The way is then finally clear for the restructuring of the retail giant and the takeover by the new owners: these are the US investment company NRDC and the holding company of entrepreneur Bernd Beetz, who was CEO of the cosmetics group Coty until 2012. Denkhaus wants to hand over to them in July.

1400 employees have to go
The employees already largely have clarity. The trembling after the third insolvency in less than four years has come to an end for the time being. Contrary to what many retail experts had predicted, Galeria will continue to operate. Nevertheless, the company and its employees are once again paying a high price. Once again, stores are closing across Germany and 1400 people are losing their jobs.

"Benko, thanks for nothing!"
The trade union Verdi erected a symbolic wooden cross in front of the trade fair building for each closing branch. "Mr. Beetz, invest in the team," reads one of the posters. Another reads: "Benko, thank you for nothing!" The cut at Galeria is nowhere near as deep as expected. Experts had predicted in January that at most 20 to 30 locations would be retained. Many expressed doubts that an interested party would even be found.

Around 120 people took part in the non-public event in Essen on Tuesday, representing around 4,600 creditors. If the insolvency plan is accepted, they will once again have to forgo a lot of money. In recent weeks, landlords, suppliers and other creditors such as the federal government have registered claims amounting to 886.1 million euros. It is expected that only up to 22.5 million euros - or 2.5 to 3 percent - will flow back to them. Payments from the claims against the previous owner, Benko's Signa Group, could increase the quota even further. Galeria slipped back into insolvency at the beginning of the year because the financially ailing parent company failed to provide the promised aid.

German state gets money back
The Economic Stabilization Fund (WSF) is receiving more money back. The state stabilization fund had supported Galeria with 680 million euros in 2021 and 2022. A large part of the claims were forfeited in the course of the insolvency proceedings concluded in 2023. A subordinated loan in the amount of 88 million euros was continued. As new collateral was agreed in the event of a default, the WSF has "preferential rights of separation" from the insolvency estate. The responsible finance agency expects that the claims will now be met in full. No further defaults are expected in the course of the new insolvency.

Insolvency administrator Stefan Denkhaus

(Bild: APA/dpa/Fabian Strauch)

(Bild: APA/dpa/Fabian Strauch)

The insolvency administrator has laid the foundation for the new start. Denkhaus' main objective was to make the Group more medium-sized. The company headquarters in Essen will be given up. The administration is to move into a branch in Düsseldorf in 2025 - significantly streamlined. Of the 92 branches, 76 will remain. According to reports, this will reduce the rent burden by around 80 million euros per year. The name is also changing. In future, the department store chain will simply be called Galeria, and the large, traditional Karstadt and Kaufhof brands will disappear. They are said to be too closely linked to the recent bankruptcies.

Further restructuring proceedings against SIGNA division
Speaking of bankruptcy: on Tuesday, restructuring proceedings were imposed on another part of René Benko's company structure. The Vienna Commercial Court has now also opened restructuring proceedings without self-administration for SIGNA Prime Holding GmbH. Around 15 creditors are affected - a mini puzzle piece in Benko's opaque web of companies. But the downward spiral continues.