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Written by Pauline Neerman
In this article
  • Companies Galeria
  • Topics Bankruptcy
  • Geography Germany
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Galeria threatens creditors with bankruptcy

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General9 March, 2023
Galeria

German department store chain Galeria is not holding back in its insolvency plan: either creditors settle for a pittance, or the chain goes bankrupt and they get nothing at all. Belgian subsidiary Inno may face a surprising twist.

Cut-throat

On 27 March, Galeria will face its creditors in some cut-throat negotiations: the department store chain is working on a restructuring plan under the protection of the court in Essen, but creditors will have to agree to a hefty debt rescheduling. Banks, investors and even the German government will face substantial losses, Lebensmittelzeitung reports.

Creditors can expect an insolvency rate of just 2 to 3.5 %, according to the plan that Lebensmittelzeitung was able to read. This would be even worse than Galeria’s previous application for debt protection in 2020, when it was still able to offer creditors 4.55 %.

Inno to German government?

If creditors reject the proposal, Galeria will have to cease operations, the insolvency plan warns. In that case, the creditors will lose everything: in case of bankruptcy, the debts are certain to exceed the value of the assets – meaning there is no way creditors can recover anything from an asset sale.

In any case, creditors will lose billions of euros. Galeria estimates there are at least 3.3 billion euros in debts, at least 1.4 billion euros will be negotiated later. The department store chain also still owes the German government 680 million euros. The latter’s fund did demand a collateral though: the Belgian daughter chain Inno, which is doing well, as well as the rights to the chain’s private labels. Should Galeria fail, Inno might end up in the hands of the German government.

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German department store chain Galeria is not holding back in its insolvency plan: either creditors settle for a pittance, or the chain goes bankrupt and they get nothing at all. Belgian subsidiary Inno may face a surprising twist.

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