Galeria Karstadt Kaufhof applies for protective shield insolvency: Many branches are threatened with closure
Created: 10/31/2022, 8:15 p.m
By: Sarah Neumeyer
The retail giant Galeria Karstadt Kaufhof is again seeking rescue in a protective shield procedure.
© Henning Kaiser/dpa
Galeria Karstadt Kaufhof has been fighting to survive for years.
Now there is a threat of the end for other branches.
Essen – Galeria Karstadt Kaufhof is again seeking rescue in a protective shield procedure.
This was announced by a company spokesman on Monday (October 31) in Essen.
For Germany's last large department store group, it is the second insolvency procedure within less than two years.
Many branches are now threatened with this.
The branch network must be “reduced by at least a third” as part of the protective shield procedure, Galeria boss Miguel Müllenbach told the
Frankfurter Allgemeine Zeitung.
Layoffs are unavoidable.
With 17,000 employees, the group currently operates 131 department stores in 97 German cities.
Wirtschaftswoche
also reported
on the protective shield procedure .
Galeria Karstadt Kaufhof: redundancies unavoidable
During the first corona lockdown in April 2020, Galeria Kaufhof Karstadt had to seek rescue in protective shield proceedings.
The insolvency proceedings lasted until the end of September.
This involved severe cuts: the closure of around 40 branches, the reduction of around 4,000 jobs and the cancellation of more than two billion euros in debt should enable the company to restart.
But the hope that the group would then be able to get off to a successful start, freed from many legacy issues, was not fulfilled.
Galeria Karstadt Kaufhof applies for protective shield insolvency: many branches are threatened with closure
On the contrary: in early 2021 and early 2022, the shrunken retail giant had to ask for government support in view of the pandemic.
Overall, the Economic Stabilization Fund (WSF) helped the traditional company in two aid campaigns with 680 million euros.
It has already become apparent in the past few days that even this was not enough to give the group the stability it needed to survive the slump in consumption triggered by the Ukraine war and inflation.
A few weeks ago, in a letter to employees, Müllenbach warned that Galeria was “in a dangerous situation” due to skyrocketing energy prices and sluggish consumption.
The group needs fresh money to continue.
According to dpa information, the group needed more than 200 million euros.
However, further state aid was controversial.
Critics consider the business model to be outdated, complain about the distortion of competition associated with the aid or see the Galeria owner, the Austrian real estate billionaire René Benko, as responsible.
Proponents of state aid pointed to the great importance of department stores for the attractiveness of many inner cities.
(sne/dpa)