Galeria Karstadt Kaufhof: Subsidiaries also in insolvency proceedings

Galeria branch in Halle

The lease for the location expires at the end of January and the sale has begun.

(Photo: IMAGO/Steffen Schellhorn)

Dusseldorf After the ailing department store operator Galeria Karstadt Kaufhof fled to protective shield proceedings under insolvency law, subsidiaries are now following suit. As the company announced on Thursday, the Essen district court has granted the application to restructure two subsidiaries in the areas of catering and food under self-administration.

This should not result in any restrictions for customers, it said in a statement. The subsidiaries are Galeria Restaurant GmbH and Galeria Markthalle GmbH. The court-appointed trustee for the two proceedings is the Düsseldorf lawyer, Frank Kebekus. He already has the same function in the protective shield proceedings of the parent company.

Kebekus sees the strong economic dependencies on the department store operator as the reason for the bankruptcy filing of the two subsidiaries. “It is common and often sensible for subsidiaries to also enter into restructuring processes under insolvency law. This enables a holistic restructuring of the group of companies,” said Kebekus.

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Galeria plans to restructure the company using protective shield proceedings. Restructuring expert Arndt Geiwitz is to support the management as a general representative. Among other things, a significant reduction in the number of branches is planned. Talking about closing at least a third.

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“It’s about an economically sensible and viable perspective for the concept of department stores in Germany,” said Geiwitz. “The goal of all measures must be to create a viable structure under changed conditions.”

For the first time he announced that the owner, Signa Holding of Austrian billionaire René Benko, intends to make further “very large investments” in Galeria. He did not say exactly how much it was.

Galeria boss Miguel Müllenbach had already written in a letter to the employees before applying for the protective shield procedure: “We will only be able to continue on our path successfully if we succeed in restructuring Galeria’s financing and injecting new, fresh capital into the company .”

The first thing to do now is to organize operations under the new conditions. To this end, the management, general representative and trustee have held talks with suppliers and service providers over the past few days.

“The supply of goods works, the services work – from guarantees to returns. The preparations for the Christmas business, including all campaigns, have also been completed,” emphasized Müllenbach. “We hope that, especially in this situation, customers will send a clear signal that they value their department store in their city.”

Decision on closures only in January

Renovators Geiwitz is now working with the management on an insolvency plan that should also determine how many of the 131 houses will be closed as part of the insolvency proceedings. Insolvency law not only gives the company the opportunity to get out of debt, but also to terminate leases extraordinarily.

>> Read also: Which Galeria branches could be closed – and which not

Discussions are now being held with many landlords to find out what kind of accommodation they want to use to prevent a possible closure. In addition to the rent, other questions such as land use, energy-related renovations and modernization and construction measures are also at stake, the company said.

“It is not yet clear which houses will be closed. Whether a location can be retained will also depend heavily on these talks,” said Geiwitz. “We anticipate that there will be clarity on this over the course of January next year.”

Geiwitz also wants to hold talks with potential buyers who want to take over individual locations. For example, the owner of the office supplies retailer buero.de announced that he was interested in taking over 40 branches including the staff and continuing them under a new name. However, whether this is realistic remains to be seen.

“In the first step, we want to know how interested parties basically imagine a commitment,” says Geiwitz. “Serious interested parties can then submit concrete offers after looking at the data.” Understandably, these do not yet exist.

More: The “Principle of Hope” accelerated the decline of Galeria

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