Cities want a say in the insolvency of Galeria parent company
Signa Holding's application for insolvency has prompted the German Association of Cities to get involved. In the event that Galeria locations are also affected, it is calling for the cities to be involved. CEO Dedy is also suggesting a change to insolvency law.
Following the insolvency of Galeria's parent company Signa Holding, the Association of German Cities has called for the cities to be involved in the further course of events. Should the insolvency have an impact on Galeria Karstadt Kaufhof locations, "the cities affected must be actively involved in the talks between creditors and owners, shareholders and insolvency administrators", said Helmut Dedy, Chief Executive of the Association of German Cities, to the Funke Mediengruppe newspapers.
Dedy also called for the cities to be able to secure any affected buildings. "In the future, insolvency law should be amended so that cities potentially have access to central properties in the event of insolvency," he said. In this context, he called for transparent ownership structures.
Signa Holding, owned by Austrian entrepreneur René Benko, admitted its insolvency on Wednesday. In Germany, the group includes Kaufhaus des Westens (Kadewe) in Berlin and the department store chain Galeria Karstadt Kaufhof. The subsidiary Galeria had filed for insolvency during the coronavirus pandemic. Now the department store chain is becoming increasingly nervous because the parent company had pledged 200 million dollars as part of the restructuring process.
Application for creditor protection
While Thomas Steinmann from "Capital" believes that direct consequences for Galeria are still unlikely and said that "nothing is burning in the short term", Gerrit Heinemann, a retail expert from the Niederrhein University of Applied Sciences, warned in the "Rheinische Post": "With Signa's insolvency, the 91 Galeria department stores are also in acute danger." Like Steinmann, he is also certain: "The 200 million euros in subsidies promised by Signa to save the department stores are no longer likely to flow in full." He predicted: "This means that Galeria's last hope is fading. After the Christmas business, we will see whether Galeria survives."
The German department store chain announced on Wednesday evening that it had applied for protection from creditors. The aim is not to become dependent on the insolvency proceedings of the Austrian parent company. "This step enables the Board of Directors and the management, in cooperation with the administrator, to wind up the business in an orderly and transparent manner, independently of the insolvency of the rest of the Signa Group," said Christian Wenger, Chairman of the Board of Directors.
Dedy therefore said that it was not yet clear whether the insolvency would have an impact on the Galeria locations. "Nevertheless, the trembling is now starting again for the employees and in the cities. The stores in central locations in particular have a key function for our city centers." Keeping city centers in large and smaller cities attractive and revitalizing them remains a challenge for at least this decade. He called for further support from the federal and state governments.
In light of René Benko's Austrian entrepreneurship and Signa Holding's insolvency application, the German Association of Cities has advocated for an active role in the negotiations regarding potential impacts on Galeria Karstadt Kaufhof locations. Furthermore, Dedy suggested amending insolvency law to allow cities potential access to central properties in such circumstances, emphasizing the importance of transparent ownership structures.
Source: www.ntv.de
