Galeria Karstadt Kaufhof creditors approve rescue plan

The creditors of the German department store chain Galeria Karstadt Kaufhof agree to the restructuring plans, renouncing billions of euros in debts. Nearly 50 stores and 5,000 jobs will be lost.

“A new beginning”

After a lengthy meeting on Tuesday, the creditors of the ailing department store chain approved a rescue plan, renouncing more than 2 billion euros in assets. This is reported in the German media. The restructuring is to rescue the Galeria Karstadt Kaufhof merger group – also the parent company of Belgian department store Inno – from bankruptcy. 47 of the 172 German branches will close down for good. According to the retailer, more than 4000 jobs will also be lost – even 5000, according to the trade unions.

Nevertheless, top executive Miguel Müllenbach sounds optimistic: “Today is the start of a new beginning, because our company now has a healthy basis again and the prospect of a secure future,” he writes in a letter to the employees. In principle, the ongoing insolvency proceedings for the retailer will be completed this month. Then the department store group will once again be able to operate debt free.

The Galeria Karstadt Kaufhof department stores are owned by the Signa Holding of the Austrian investor Rene Benko. He took over loss-making Karstadt in 2015 and merged it with Galeria Kaufhof in 2018. Both chains are suffering from the growth of e-commerce. Moreover, they have too many stores in Germany: in many cities, Karstadt and Kaufhof branches are located on the same shopping street. The corona crisis caused turnover to plummet, making a radical reorganisation inevitable.