Creditors approve plan for further rescue of Galeria department store network.
The insolvency administrator reports that the insolvency rate, or the percentage of their claims that creditors will receive, is around 2.5%. This figure may rise if Galeria receives funds from its former parent company, Signa. Talks with Austrian insolvency officials are ongoing at this time. The total claims are estimated to be around 800 million euros, but only a mere portion of this amount will be paid to creditors.
If creditors had opted against the insolvency program, Galeria would have faced total liquidation. According to the report, the decision was confirmed by the court and will be legally binding after a two-week objection period, which is currently in progress.
As of now, the plan involves shutting down 16 out of Galeria's 92 stores across Germany. However, this list may be revised in June. The number of jobless employees, which stands at roughly 1400 according to the plan, potentially hinges on these decisions. Galeria currently employs approximately 12,800 people.
The trade union Verdi expressed dissatisfaction and planned a demonstration at the site of the event. Around 25 to 30 representatives of the Federal Tariff Commission participated in the protest. Verdi representative Marcel Schäuble leveled criticism at the investors, labeling their stated plans as risky: "No ambitious goals have been set for the future. Essentially nothing beyond existing strategies has been proposed."
"We don't desire economic efficiency to be achieved primarily through layoffs," Schäuble clarified further. "Past experiences show that cost-cutting has not proven effective in stabilizing the department store," he added. He highlighted the need for more investments.
The US investment firm NRDC Equity Partners and the involvement company BB Capital SA, led by 73-year-old entrepreneur Bernd Beetz, are slated to take over Galeria. The bankruptcy proceedings are expected to conclude by the end of July, with the new owners possibly becoming active from the first of August. Beetz vowed that they would invest heavily in Galeria, with a focus on innovative customer offerings.
Galeria-Karstadt Kaufhof sought bankruptcy for the third time back in January. The department store chain was experiencing financial issues due to the collapse of its parent company, Signa. In April, it was announced that the consortium would assume control of the department store chain.
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- Despite the approval of the insolvency plan, Creditor organisations, such as the United Services Union, have expressed concerns and are planning demonstrations.
- The Creditor meeting, which confirmed the insolvency plan, will be legally binding after a two-week objection period, during which Galeria Kaufhof's former parent company, Signa, may offer funds.
- In contrast to the initial plan, which includes closing 16 Galeria stores in Germany, a potential revised list will be discussed in June, affecting the job losses of approximately 1400 employees of the Department store chain.
- The Austrian insolvency officials are currently in talks with Galeria Kaufhof's insolvency administrator, as the total claims stand at around 800 million euros, with only a small portion expected to be paid to Creditors.
- As part of the insolvency plan, NRDC Equity Partners and BB Capital SA, led by entrepreneur Bernd Beetz, will take over Galeria Kaufhof, aiming to invest heavily in the department store chain, focusing on innovative customer offerings.
- The news of the insolvency plan's approval comes after Galeria-Kaufhof sought bankruptcy for the third time back in January, primarily due to the collapse of its parent company, Karstadt.
Source: www.stern.de
