Shopping mall retailer - Gallery administrator suggests approval of reorganization proposal
Insolvency administrator Stefan Denkhaus advised creditors of Galeria Karstadt Kaufhof to consent to the restructuring plan for the department store chain on Tuesday. "I'm certain that with this management and the new investors, Galeria has a bright future. Hence, I suggest creditors to accept the plan," said an expert in insolvency and restructuring law. The other option would be to dissolve the company.
The creditors' meeting is scheduled for Tuesday at Messe Essen to decide on the insolvency plan, created by Denkhaus, which aims to put the company back on a successful path. The outcome is expected in the afternoon and is not a public event.
Creditors have submitted claims totaling €886.1 million. Among the creditors are landlords, suppliers, tax office, and the Federal Employment Agency, who paid insolvency benefits to employees. In the past few weeks, claims worth €886.1 million have been documented. The insolvency plan requires creditors to sacrifice a significant portion of their money.
Insolvency administrator Denkhaus expects an insolvency rate of 2.5-3%. The rate establishes the share of unsettled debt that creditors will receive if they agree to the plan. It could slightly increase. Payments from cases against the former owner, the Signa Group of businessman René Benko, might raise the rate, according to Denkhaus.
Experts expect the plan to be passed. "A rejection of the plan would be a major surprise. The creditors need to compromise, but they ultimately have no other choice," stated a professor in business management for trade at the University of Worms, Jörg Funder. There would be no advantage in denouncing the plan and resulting in a general insolvency. Creditors would then face complete losses, and Galeria would be dismantled.
Outcome of the creditors' meeting
In the plan, it is also stated that a consortium comprising the U.S. investment group NRDC and the investment firm BB Kapital SA of entrepreneur Bernd Beetz must assume control of Galeria. As part of the bankruptcy proceedings, the company will downsize again. By the end of August, 16 of the 92 department store stores will close. Approximately 1400 employees will be fired from the 12,800-strong workforce.
Verdi negotiator Marcel Schäuble reiterated his demand for a viable future concept from the new owners before voting. "What's required the most is sufficient investments to secure the retail concept, locations, and jobs for the long term," he stated. "Store closures and cost-cutting programs have proven in the past to not result in a successful realignment."
If the creditors approve the insolvency plan, it must be confirmed by the court again. Once approved, the insolvency proceedings can be lifted. By the conclusion of July, Denkhaus intends to transfer the company to the new owners. Galeria filed for insolvency in early January. It is the third bankruptcy in less than 3.5 years.
Read also:
- Tough return to normality in snow and ice
- Fewer unauthorized entries: Domino effect through controls
- Trial against BND employee from mid-December
- Xhaka leads Leverkusen to triumph in cup tournament, scoring two goals.
Source: www.stern.de
