Now managing director Miguel Müllenbach, reorganizer Arndt Geiwitz and trustee Frank Kebekus want to create structures that are sustainable in the long term without further state aid. But after that has not worked before, some experts have doubts as to whether it can succeed this time. The anger and disappointment, but also the worries of the 17,400 employees, are correspondingly great.
How is the rescue of Galeria Karstadt Kaufhof supposed to work this time? The most important questions and answers.
The economic situation must be very serious. According to the latest information available, management expects a loss in the low to three-digit million range for the fiscal year that ended in September. In the previous year, which was heavily influenced by the corona restrictions, Galeria had to cope with a minus of 622 million euros.
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The company started debt-free after leaving the first protective shield on October 1, 2020. But the permanent losses and high costs for the planned modernization of the department stores and, most recently, the energy burden the balance sheet again. In addition, customers continued to be reluctant to visit department stores towards the end of the pandemic. The attempt to get state aid again from the Economic Stabilization Fund failed.
What exactly is the protective shield procedure?
It is a special form of bankruptcy law. However, the procedure must be applied for earlier than a normal insolvency. Insolvency or over-indebtedness must be imminent, but must not yet have occurred. At the same time, this means that a company must still have sufficient substance and a business model in order to have a chance of being restructured.
What makes such a process possible?
Ongoing operations are protected from access by creditors. For example, you cannot pick up inventory or machines. At the same time, hard restructuring steps can be implemented. Employees can be dismissed within three months without a social plan and without notice periods. On the other hand, the administrator has the task of making sure that the interests of the creditors are not lost sight of.
Who are Arndt Geiwitz and Frank Kebekus?
Geiwitz is a tax consultant and auditor. Eight years ago, the insolvency expert tried to save Anton Schlecker’s drugstore chain and suffered a defeat. The bankruptcy could not be prevented, more than 20,000 employees lost their jobs.
In 2020, Geiwitz and the lawyer Kebekus formed a well-coordinated team at Galeria Karstadt Kaufhof. Kebekus was the inconvenient reorganizer, while Geiwitz, with his friendly and approachable demeanor, acted as the face of the company after the departure of CEO Stephan Fanderl. Among other things, Geiwitz is a trustee at Willy Bogner and is known for his good contacts.
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Kebekus also has a lot of experience with spectacular insolvency cases. One of his successes was the rescue of the Suhrkamp publishing house. As early as 2009, he represented the real estate consortium Highstreet in the Karstadt insolvency – and thus sat on the other side of the negotiating table.
The high hopes of the Galeria staff now rest on the auditor and tax consultant. Can the experienced reorganizer save the department store group and at least some of the jobs?
(Photo: SGP Schneider Geiwitz & Partner)
What’s next for Galeria?
First of all, the district court of Essen must grant the application for the protective shield. For this purpose, the ability to restructure the company must be proven, as well as the impending insolvency or over-indebtedness. If the judges approve the application, the company must submit a restructuring concept within three months. This in turn must be approved by the administrator and the creditors.
How should the company be restructured?
The management has already announced that it intends to close at least a third of the branches. That could be up to 45 of the 131 department stores. According to Geiwitz, there is no list yet, it should be created in the coming weeks. It is considered likely that those houses in particular are threatened with closure that were already on the cross-off list for the first protective shield. At that time, the renovator wanted to close 85 houses, but only 42 were.
The remaining department stores are to be converted according to the “Galeria 2.0” concept, announced Galeria boss Müllenbach. The modernization offensive launched last autumn has been sluggish so far.
What do the employee representatives say?
The Verdi union has declared that it wants to fight for every job. According to the union, there is great anger and disappointment among colleagues. However, the employees will not completely prevent job cuts. Management has already stated that redundancies will be unavoidable.
What else can be expected from owner René Benko?
Galeria Karstadt Kaufhof is owned by the Signa Holding of the Austrian real estate investor René Benko. The entrepreneur, who is suspected of bribery in his home country, has not yet made a statement on the current situation. However, the decision to once again take the path of a protective shield procedure, which is painful for the workforce, should have been closely coordinated with him.
The Galeria owner has not yet publicly commented on the current situation.
(Photo: Getty Images for Oberpollinger/ )
This could indicate that Benko has hopes of making a group that has shrunk again future-proof. Whether he will provide his own financial resources again remains to be seen.
What does politics say about another failure at Galeria?
Politicians now see above all the responsibility of owners and company management. “Especially at the moment, everyone involved must ensure that employee rights are protected in the ongoing insolvency and protective shield proceedings,” says SPD parliamentary group leader Dagmar Schmidt: “We stand by all employees and the Verdi union and appeal to everyone Those involved to protect the more than 17,000 jobs in the best possible way despite the difficult economic situation and to enable good solutions for all employees”.
What happens if the rehabilitation fails?
If the restructuring concept is rejected by the trustee and the creditors, for example because individual creditors feel disadvantaged, the court decides on regular insolvency proceedings. In that case, Galeria could face liquidation.
More: René Benko on suspicion of bribery: These are the investigators’ allegations against the Galeria owner