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Insolvency proceedings opened – branch closures at Galeria open

The District Court of Essen has opened insolvency proceedings for the last major German department store chain, Galeria.

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Insolvency proceedings opened – branch closures at Galeria open

The District Court of Essen has opened insolvency proceedings for the last major German department store chain, Galeria. The court gave the go-ahead for the self-administration process on Wednesday, after the restructuring plan had been submitted to the court on time, the company said.

The Galeria management is now focusing on a more local focus for the group formed from Kaufhof and Karstadt. The Verdi union called on Galeria owner Rene Benko to take responsibility for the future of the department store chain.

The management with the general representative Arndt Geiwitz can now continue the restructuring of the company, Frank Kebekus has been confirmed as administrator, Galeria said. The restructuring concept envisages positioning Galeria with a product range that is more strongly geared to local needs. This also includes the integration of mobile, online and branch purchasing options.

Galeria should then take a “leading position in the important segments of clothing, beauty and home”. It is still unclear what the branch network will look like – talks with the landlords continued. Galeria wants to push rents down. Geiwitz originally announced last year that in the course of January there would probably be clarity about which of the 131 department stores would have to close their doors. According to insiders, this will probably not be the case before March.

Galeria also stated in mid-January that there were several bidders for the group's department stores. Discussions with potential buyers are ongoing. This is one of the reasons why it is still not certain how many department stores could be preserved. The owner of the department store giant is the multi-billion dollar Signa Holding of the Austrian investor Rene Benko, whose empire also includes Galeria properties.

"It is now particularly important that the investor himself, Rene Benko, takes responsibility for the future of the department stores, for the future of jobs and thus for the people at Galeria," warned Stefanie, the board member responsible for retail at Verdi benefit Berger. A viable concept and corresponding investments are necessary. Benko is also on the train.

"Focusing, prioritizing, efficiency and speed are the clear guidelines that management must now implement consistently," Geiwitz announced. If this succeeds, Galeria will have “a positive future in Germany”. Administrator Kebekus also sees "very good chances that the creditors' meeting, which is expected to take place at the end of March, will also approve the plan". After the opening of the procedure, Galeria has to pay wages and salaries for the employees themselves again, the insolvency money has been paid through the Federal Employment Agency (BA) for the past three months.

Federal Economics Minister Robert Habeck said in Berlin that he did not want to comment specifically on the insolvency proceedings. The federal government supported the company twice during the Corona period - because of the special importance of the branches for the inner cities. "Nevertheless, there are structural issues that could not be resolved during this support period," he added.

Galeria Karstadt Kaufhof went through insolvency proceedings more than two years ago. At that time, a good 40 of 172 branches were closed, with around 5,000 employees losing their jobs.

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