The Essen department store group Galeria Karstadt Kaufhof is insolvent again.
The company filed for insolvency with the responsible district court in Essen on January 9th, Galeria Karstadt Kaufhof GmbH announced on Tuesday. The reason for the already expected proceedings is the numerous bankruptcies of the parent company Signa Group. According to Essen, these are intended to “massively damage” Galeria, hinder ongoing business and severely limit future development opportunities through high rents and expensive services.
Stefan Denkhaus was appointed as the provisional insolvency administrator for the proceedings with which the department store group wants to save itself from the situation. The Galeria management, consisting of CEO Olivier van den Bossche and CFO Guido Mager, will actively support the process together with the provisional insolvency administrator.
“Galeria’s operational success is burdened by the framework conditions of the old ownership structure. We explicitly see today as a liberation move,” said Van den Bossche. “The only thing that counts now is what brings Galeria forward. We have to consistently get the Signa rents, expensive service providers, the service center in Essen and the efficiency of our logistics on track. Our branches and sales team are already functioning well and we have also made our online business profitable.”
The branches and online business will continue to operate in full.
Liberation with change of ownership
The management team wants to continue the local focus. Now they are aiming for a change of ownership with the “liberation from the framework conditions set by Signa”. Discussions with potential investors have already begun.
“The Signa Group’s bankruptcies have thwarted Galeria’s good development and threaten the company,” said Denkhaus. “The management therefore had no other option than to free the company from this grip through insolvency. We will work together with all our might to continue on the path we have begun under better conditions and to maintain Galeria as a company. Breaking up is expressly not the aim of the proceedings.”
Galeria goes bankrupt again
With the new procedure, Germany’s last large department store group files for bankruptcy for the third time in four years.
The last insolvency proceedings only ended last May after the company entered protective shield proceedings in October 2022 in order to restructure itself. Before that, there was already a protective shield procedure during the Corona lockdown in April 2020, which was ended at the end of September 2020.
In the two previous insolvency proceedings, the creditors waived claims worth billions in order to save Galeria. The German state also supported the company in 2021 and 2022 with the Economic Stabilization Fund (WSF). A total of 680 million euros were invested in Galeria.
Both protective shield procedures also resulted in the closure of around 40 locations. Galeria currently operates 92 department stores and, according to its own information, employs more than 15,000 people. It is currently not clear what consequences the bankruptcy that has now opened will have for the locations and employees. Meanwhile, the Federal Employment Agency guaranteed the employees insolvency money when the procedure was opened.