Dusseldorf In the Essen headquarters of Galeria Karstadt Kaufhof, almost nothing works without Arndt Geiwitz’s consent. The official title of the 53-year-old is general manager, appointed by the owner, Signa Holding, owned by Austrian billionaire René Benko. But it seems as if the insolvency expert has taken over the management of the company, report employees who do not want to be named.
The managing partner of the law firm SGP Schneider Geiwitz is supported by an army of consultants and lawyers. Several law firms, including McDermott Will & Emery from Düsseldorf and Seitz from Cologne, have sent experts in restructuring, insolvency law, labor law, real estate law and public law to Essen, as the company has confirmed.
In the first insolvency proceedings two years ago, Galeria spent 81.4 million euros on consulting fees, as the company published in the Federal Gazette. 41.5 million of these were expenses for the protective shield procedure, 39.9 million flowed into the subsequent insolvency proceedings.
And this time, too, an amount of a similar amount is likely to come up – although it is not yet clear whether this will actually secure the future of the company.
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“The consulting expenses include fees and third-party costs from various different consulting companies with different orientations,” explains a Galeria spokesman when asked about the millions in payments at the time. Various appraisal costs were also included.
In addition, Geiwitz and the court-appointed trustee Frank Kebekus received remuneration. “In no case do the fees describe the merits of individual people, but are law firm remuneration for the use of large teams with experienced professionals over months, sometimes over years,” says the Galeria spokesman.
The restructuring expert must draw up the insolvency plan for Galeria with the management by the end of January.
(Photo: SGP Schneider Geiwitz & Partner)
On October 31, 2022, the company again applied for protective shield proceedings, which are regulated in Section 270 of the Insolvency Code. The decisive factor in this procedure is that there is no insolvency administrator, but that the management continues to run the business. It is controlled by an administrator. The prerequisite for this is that it is previously proven in an expert opinion that there is no insolvency.
Galeria hired an insolvency advisor back in May
Apparently, the owner and the Galeria management were not really surprised by the desolate business situation, which ultimately led to the application for the protective shield procedure. As the company confirms when asked, it commissioned the insolvency expert Richard Scholz from the Wellensiek law firm in May to advise the management on questions of insolvency law. The specialist magazine “Juve” first reported on it.
Months before the proceedings were initiated, nervousness was also growing on the supervisory board. It is said from circles of the control committee that the management was last informed about the figures on a weekly basis. We hear from suppliers and service providers that weeks before they go to the district court, invoices have not been paid or have only been paid with a delay.
Now the “existence-threatening emergency” that Galeria boss Miguel Müllenbach had already admitted by terminating the collective agreement with Verdi two weeks before the application for the protective shield procedure is obvious. And Geiwitz is allowed to sweep up the pieces again – and earn good money from it.
Trustee Kebekus must represent the interests of the creditors
What is striking is that all law firms and consulting firms that are now working on the restructuring were also on board with the 2020 protective shield procedure. For example, experts from McDermott Will & Emery worked on Galeria’s insolvency plan, which was presented on July 1, 2020 and with which Geiwitz ultimately managed to get the creditors’ committee to approve it.
The administrator was also the same in 2020: Frank Kebekus’ task is now again to represent the interests of the creditors and to ensure that all provisions of insolvency law are observed.
The insolvency plan should be available at the end of January. Only then will it become clearer which of the 131 Galeria branches have a future and which do not. Until then, Geiwitz will have a veritable marathon of meetings.
>> Read also: Which Galeria branches could fall victim to the renovation – and which not.
This week he met with the Verdi union for formal negotiations and has already discussed the next steps with the works council. Geiwitz will quickly seek direct contact with the landlords in order to explore the scope there.
Discussions with parties interested in taking over individual houses have not yet been scheduled. Among them are the Detmold entrepreneur Markus Schön. According to the owner of the mail order company buero.de, he wants to take over 47 locations. The Czech investor representative Michal Rýdl, who is also interested in taking over a large number of department stores, also confirms that he has already spoken to Geiwitz.
Geiwitz already handled the Schlecker bankruptcy
“Now time is of the essence,” warns an experienced restructuring consultant who does not wish to be named. He is certain that the rough outline of the insolvency plan should already be in the minds of those responsible.
The expert sees it as an advantage that the same consultants, headed by Geiwitz, have taken over the process. The first time the restructuring was not carried out consistently enough to the end. Numerous locations that were initially on the cross-off list were ultimately not closed.
“Restructurers know that inconsistency takes revenge quickly, especially in times of crisis,” says the consultant. That’s why Geiwitz will probably not make this mistake again this time.
Arndt Geiwitz also has extensive experience with insolvency proceedings in the retail sector. Most of the time, however, he worked as an insolvency administrator, unlike at Galeria. This is how he handled the Schlecker bankruptcy. He was also appointed as insolvency administrator in the Weltbild insolvency in 2014.
>> Read also: Restructuring expert Arndt Geiwitz in an interview: “Only amputation can help”
His position as general representative, as with Galeria, is not regulated by the insolvency code. But since he is considered an extension of owner René Benko, he has a great deal of creative leeway for his difficult task – also in relation to Galeria boss Müllenbach.
And that he can represent the interests of the owner well, he showed in the first protective shield proceedings, when he wrested the creditors’ approval of the insolvency plan and thus a waiver of claims of more than two billion euros.
This time, too, he has a clear target. “The goal of all measures must be to create a viable structure under changed conditions,” he emphasizes. Because the owner Benko also needs a solvent tenant for the properties he still owns, who can ensure the return with his payments.
Transparency note: The Handelsblatt Media Group, like the Signa Holding of Galeria owner René Benko, is involved in the digital education platform Ada.
More: Subsidiaries of Galeria should also go into insolvency proceedings under self-administration.