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The demolition of Galeria Karstadt Kaufhof is off the table for the moment: the creditors’ board has approved the rescue plan by a majority. You are giving up billions and thousands of employees are losing their jobs.
They had fought for six hours at the Essen fair with the management, General Representative Arndt Geiwitz and Sacherwalter Frank Kebekus, then it became clear: the creditors’ meeting of the Galeria Karstadt Kaufhof (GKK) approved the insolvency plan to save the last great German department store chain. In a letter to employees, the head of GKK, Miguel Müllenbach, said: “Today is the starting point for a new beginning, because our company once again has a solid foundation and the prospect of a secure future.”
47 branches are about to close
However, thousands of employees will lose their jobs. According to the ver.di union, more than 5,000 jobs will be cut, according to Kebekus, more than 4,000 jobs will be cut. 47 branches face definitive closure. So far there have been 172 Karstadt and Kaufhof branches in Germany.
In front of the room, individual works councils and members of the ver.di collective bargaining committee demonstrated against the planned cuts. “This is a plan, and plans can be adapted and changed,” said Stefanie Benefitberger, a board member of ver.di. It is important to keep going and keep fighting for the branches threatened by the cuts and the jobs affected. The insolvency administrator, management and owner Signa would have to be held liable. At the same time, the future of the branches should be discussed with the municipalities.
Creditors give up billions
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.
For creditors, 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, according to media reports.
Galeria Karstadt Kaufhof, like many department stores, is owned by Signa Holding, owned by Austrian investor Rene Benko. After Karstadt’s first bankruptcy in 2009, Benko bought the majority in 2013 and took over the entire department store chain in 2015. In 2018, Karstadt and Galeria Kaufhof merged and Signa took over all shares in summer.
Karstadt and Kaufhof had already fallen into crisis in the past due to fierce competition with online retailers. Due to the loss of income in the Corona crisis, the group went bankrupt.
