At the department store group Galeria Karstadt Kaufhof, company representatives initially expressed reservations about the insolvency of Signa Holding GmbH.
“The situation does not have any immediate negative impact on Galeria at the moment. We will calmly wait for the outcome of this orderly process,” it said. Jürgen Ettl, Galeria’s general works council chairman, did not want to comment on the issue when asked.
The Verdi union holds the Galeria management accountable. “If Signa GmbH cannot provide its financial support as promised, Galeria management must be prepared,” said Corinna Groß, head of the national retail group at Verdi. “The constant bad news at Signa is causing unrest among Galeria employees. They want job security and a predictable perspective.”
Self-administered restructuring proceedings
Signa Holding GmbH, owned by the Austrian real estate and trading entrepreneur René Benko, announced insolvency proceedings this Wednesday. The Signa Group announced that the holding company would apply to the Vienna Commercial Court to open restructuring proceedings under self-administration.
The real estate and trading group consists of a complex network of companies with several hundred individual companies. This also includes Galeria Karstadt Kaufhof. Signa’s difficulties could therefore possibly have a negative impact on the financially troubled department store group.
Germany’s last large department store group had to seek rescue for the second time in protective shield proceedings at the end of 2022. In March 2023, the creditors’ meeting approved the insolvency plan and cleared the way for restructuring. Signa had promised 200 million euros for this, which should flow in several tranches until 2025, the first 50 million reportedly in February.
Trade experts expect drastic consequences
Johannes Berentzen, head of the BBE trading consultancy, expects drastic effects for the group. “The restructuring plan cannot work on the earnings side because there is a lack of investment,” he said. Department stores have a chance, but Galeria in its current form has no future. “Unless there is an investor with trading expertise who takes over the entire network, significantly changes the concept and invests many 100 million euros in modernizing the areas,” said Berentzen.
The legally binding restructuring plan for Galeria called for the closure of around a third of the 129 branches. Some of the locations have already been closed this year, and almost 20 more will close their doors in January 2024. Branches in Berlin, Bielefeld, Darmstadt, Heidelberg, Stuttgart and Wuppertal are affected, among others. According to the company, 92 branches will ultimately remain.
Shopping center operator ECE was also affected
Alexander Otto, head of the shopping center operator ECE, is “worried about Galeria”. “Whether Galeria manages to get back on its feet also depends on the support of the owner. If it fails now, it won’t be any easier,” Otto told “Wirtschaftswoche”. Galeria is represented in five of the around 100 ECE shopping centers across Germany.
The federal government is also dealing with the Signa insolvency. “Possible effects must now be examined,” said a spokeswoman for the Federal Ministry of Finance. Galeria Kaufhof Karstadt received state support in 2021 and 2022. The Economic Stabilization Fund (WSF) helped the company with a total of 680 million euros.
Signa Holding is not a contractual partner in the Elbtower project
The bankruptcy filing has no direct consequences for the currently dormant Elbtower skyscraper project in Hamburg’s Hafencity. “There is no contractual connection between the company buying the Elbtower and Signa Holding GmbH,” said a spokesman for the urban development authority on Wednesday in response to a dpa request. “This has no direct impact on the existing contractual relationship between the city of Hamburg and the buying company.”
The property purchase agreement for the Elbtower project was concluded between the Hanseatic City of Hamburg and a project company called Hamburg, Elbtower Immobilien GmbH & Co.KG and Signa Prime Selection AG. “Signa Holding GmbH is one of the shareholders of Signa Prime Selection AG,” it says in the statement. “In this role, it provides patronage for the fulfillment of contractual obligations.” According to the spokesman, the authority wants to monitor the situation closely “so that the city of Hamburg can take further steps if necessary.”(dpa)