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More than 16,000 Galeria Karstadt Kaufhof (GKK) employees can breathe a sigh of relief: Germany’s last major department store group has yet another chance. On Tuesday, the department store group’s board of creditors approved the company’s management bankruptcy plan to save the traditional company with a large majority, thus clearing the way for the rehabilitation of the struggling retail chain.
If creditors said yes, more than 16,000 jobs at GKK would be saved, said trustee Frank Kebekus. If the plan had been rejected, the department store giant would have threatened immediate liquidation and, with it, the loss of all jobs. At present, there is a very high probability that the insolvency proceedings will be completed successfully in early October.
In a letter to employees, GKK boss Miguel Müllenbach emphasized: “Today is the starting signal for a new beginning, because our company now has a solid foundation again and the prospect of a secure future.” The department store giant could likely face the competition again in October without bankruptcy restrictions and debt free.
“Then we will be stronger and better positioned than before the Corona crisis,” Müllenbach said. There is still hope that some branches are threatened with closure, as Kebekus emphasized. “Currently 47 of the 171 branches will be closed. This means that more than two-thirds of the department stores will be retained, and there may still be a handful where the last word has not yet been said,” he said. Overall, many more branches could have been preserved than originally expected. However, around 4,000 employees would lose their jobs due to the contraction.
The company is also suffering from the triumph of online commerce.
For creditors, yes to the bankruptcy plan means giving up much of the money that the department store group still owes them. In general, suppliers, owners and other creditors have to give up more than two billion euros.
For the creditors there was no choice but to accept the plan. If the bankruptcy plan had been rejected, they probably would not have seen any of your money again. On the contrary, if they continue, they can at least expect to receive just under five percent of their claims, also thanks to a triple-digit million-dollar grant from GKK owner René Benko.
Galeria Karstadt Kaufhof entered into a serious crisis due to the temporary crown-related closure of all branches and had to seek rescue in protective shield procedures. The company is also suffering from the triumph of online retail and the drop in visitor numbers in cities. The department store chain doesn’t even make 5 percent of its sales on the Internet.
