German department store chain Galeria is now also being dragged into the Signa Group’s insolvency vortex: according to media reports, the retail subsidiary of the crumbling Benko empire is facing bankruptcy – for the third time in three years.
Department store chain Galeria Karstadt Kaufhof plans to file for bankruptcy tomorrow, Tuesday, reports ntv.de, citing the environment of real estate juggler René Benko. The reason is likely a lack of financing for Signa’s parent company after the holding company went bankrupt in November. The “Süddeutsche Zeitung/SZ”, the “FAZ” and the Swiss “NZZ” also reported on the upcoming bankruptcy filing. Preparatory discussions about this are already underway with creditors. However, there was no official statement from the Galeria itself.
There is a risk of over-indebtedness
The Galeria is threatened with excessive debt. According to the FAZ report, during the latest restructuring of the department store chain, Signa Holding committed to pay a net amount of 200 million euros to Galeria. Although half of these are landlord subsidies for Signa buildings, the first payment tranche of 50 million euros should have come in February. However, following the bankruptcy of Signa Holding in November, it is unlikely that this money will be paid out. Liquidity could also come under pressure because, according to Galeria’s supervisory board, it should not fall below 90 million euros.
12,500 jobs are shaky
In the event of a new bankruptcy, 12,500 jobs and 110 department stores would be at risk. Some of these closures were already planned for January. According to the FAZ, it is unlikely that there will be another renovation in-house, which means that potential buyers are already being sought in the background. The FAZ mentions, among others, the Thai Central Group, which already has the operational majority in the KaDeWe Group, as possible candidates. According to SZ, discussions are ongoing with the financial investor Droege-Groep, but no confirmation has been received.
Galeria’s works council was recently optimistic about the future of the department store chain in view of a possible bankruptcy. “The fact that the core companies of the Signa Group are now insolvent means that we can free ourselves from the Signa Group and its interests,” works council leader Jürgen Ettl told the “Wirtschaftswoche” this weekend. If a new owner is found who “has an interest in Galeria doing well, just like we do, the company will be viable for the future,” Ettl says.
Creditors are cutting billions
During Galeria’s two previous renovations in 2020 and 2022, creditors had to accept significant cuts. According to reports, they had to relinquish several billion euros in claims. In addition, 680 million euros of German tax money flowed to Galeria during this period.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
