State aid - Fewer losses for the Federation in Galeria rescue
The financial losses for the Federal Government due to the state aid packages for the repeatedly insolvent retail chain Galeria Karstadt Kaufhof are expected to be capped, according to the Government's representation. From the funds of the Corona-Rescue Fund (WSF), roughly 119 million Euro have been repaid so far, as stated in a response from the Economic Ministry to a request from the group led by Sahra Wagenknecht (BSW) in the Bundestag. Previously, the business magazine "Capital" reported on this.
The WSF has received repayments consisting of principal payments, interest, and partial realization of collateral since the implementation of the measures, according to the response. Further repayments are expected from principal payments and realizations "from an ongoing securities sale." "The final costs for the WSF cannot be definitively determined at this time," the Ministry added.
The state stabilization fund WSF intervened with 680 million Euro for Galeria in 2021 and 2022. A large part of the claims had expired during the insolvency proceedings that were concluded in 2023.
The aforementioned "subordinated loan" of 88 million Euro was continued. Since new securities were agreed upon for the case of a payment default, the WSF, according to earlier statements, holds priority withdrawal rights from the insolvency estate.
The responsible financial agency expects, according to reports from late May, that the claims will now be fully met. On April 1, 2024, the insolvency proceedings for the Galeria Karstadt Kaufhof GmbH were reopened again. No further losses are to be expected in the context of the new insolvency, it was reported in late May. The General Secretary of the Alliance Sahra Wagenknecht (BSW), Christian Leye, sharply criticized the Galeria rescue processes: "Unfortunately, it must still be noted that public money has hardly been burned as unreliably anywhere as at Galeria. The now reported repayments to the WSF change little and are no reason to celebrate." Besides the employees, the taxpayer remains the biggest loser in the Galeria tragedy.
- The retail sector, particularly consumer goods companies like Galeria Karstadt Kaufhof, have faced numerous insolvencies in Germany, resulting in significant financial aid packages from the Federal Government.
- The financial assistance to Galeria Karstadt Kaufhof has been provided through Germany's Corona-Rescue Fund (WSF), which has already seen repayments worth approximately 119 million Euro.
- The Galeria Karstadt Kaufhof chain, a staple in the German retail landscape, has received a total of 680 million Euro from the WSF in 2021 and 2022 to help overcome its financial struggles.
- The WSF, as part of the aid package, also provided a subordinated loan of 88 million Euro to Galeria Karstadt Kaufhof, with priority withdrawal rights in case of insolvency.
- The Berlin-based department store chain, with locations like GALERIA Kaufhof and Karstadt, has recently reopened its insolvency proceedings on April 1, 2024, amidst expectations of no further financial losses.
- Critics, such as Sahra Wagenknecht's BSW group in the Federal Parliament, have voiced concerns about the efficiency and reliability of the Galeria rescue processes, with Wagenknecht herself calling the situation a "tragedy" for the German taxpayer.
- The Bundestag, Germany's federal parliament, has also been critical of the rescue efforts, with the General Secretary of the Alliance Sahra Wagenknecht (BSW) stating that public money has been "burned unreliably" in the Galeria case.
- The reopening of insolvency proceedings in 2024 for Galeria Karstadt Kaufhof brings hope for a more sustainable retail environment in the future, as the German government looks to navigate the challenges posed by the ongoing Coronavirus pandemic in the retail sector.
