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Clear the way for renewal, but at a high price: the creditors of Galeria Karstadt Kaufhof have accepted the insolvency plan. Thousands of employees are losing their jobs.
Germany’s last major department store chain, Galeria Karstadt Kaufhof (GKK), has another shot. The department store group’s board of creditors approved the bankruptcy plan on Tuesday, which is supposed to save the traditional company.
In a letter to employees sent after creditors said yes, GKK boss Miguel Müllenbach said: “Today is the starting signal for a new beginning, because our company now has a solid foundation again and the perspective of a secure future “.
According to the plans of the company management, the bankruptcy procedure should be completed this month. The department store giant would likely be able to compete for customers again in October without bankruptcy restrictions and debt free, Müllenbach stressed. “Then we will be stronger and better positioned than before the Crown crisis, which is expected to trigger some companies in the fall that, unlike us, are heavily in debt.”
Suppliers and owners lose a lot of money making decisions
For creditors, however, the move means giving up a large chunk of money still owed by the department store group. In general, suppliers, owners and other creditors have to give up more than two billion euros.
The renovation also demands great sacrifices on the part of the employees. Because the new beginning means the end of almost 50 department stores, which the company management believes no longer have prospects, and the move means the loss of jobs for some 5,000 employees. The sell-off has already started in many of the affected department stores. Many municipalities also fear that the closure of department stores will make their pedestrian areas less attractive.
Despite the heavy financial losses, the creditors had no choice but to accept the plan. Because if the bankruptcy plan had been rejected, they probably wouldn’t have seen any of your money again. On the other hand, if they continue, they can at least expect almost 5 percent of their claims to be paid, also through a triple-digit grant from GKK owner René Benko.
Galeria Karstadt Kaufhof: loss of billions due to Corona
Galeria Karstadt Kaufhof had entered a serious crisis due to the closure of all branches related to the crown and had to seek ransom in a protective shield procedure in early April. The company reported at the time that it expected a 1 billion euro loss in sales this year alone due to Corona.
In mid-June, the department store giant announced that it would close a total of 62 of the 172 department stores as part of its redevelopment plans. Thanks to concessions from the owners and the help of local authorities, it has since been possible to reduce the number of closed branches to 46. Galeria Karstadt Kaufhof now expects a relatively quick recovery through the redevelopment plan.
