The creditors’ meeting of Galeria Karstadt Kaufhof has approved the restructuring plan for the insolvent department store chain. What happens next? At least one important question remains unanswered.
Galeria Karstadt Kaufhof has overcome the last major hurdle to its rescue. The creditors’ meeting at Messe Essen on Tuesday approved the plan to restructure the ailing department store chain, as insolvency administrator Stefan Denkhaus announced.
The insolvency proceedings are now formally nearing completion. After the objection period has ended, the responsible district court in Essen can annul the proceedings in June. Then the way is finally clear for the restructuring of the retail giant and the takeover by the new owners: these are the US investment company NRDC and the investment company of the entrepreneur Bernd Beetz, who was CEO of the cosmetics group Coty until 2012. Denkhaus would like to hand over to them in July.
The employees already have a lot of clarity. The trembling after the third bankruptcy in less than four years is over for now. Contrary to what some retail experts had predicted, Galeria is continuing. Nevertheless, the company and employees are once again paying a high price. Branches are closing again across Germany, 1,400 people are losing their jobs.
The Verdi union set up a symbolic wooden cross for each branch in front of the exhibition building. “Mr Beetz, invest in the team,” says one of the posters. Another says: “Benko, thanks for nothing!” The cut at Galeria is nowhere near as deep as expected. Experts had predicted in January that at most 20 to 30 locations would be retained. Many expressed doubts that anyone would even be interested.
Around 120 people, representing around 4,600 creditors, took part in the non-public event in Essen on Tuesday. By accepting the insolvency plan, you will have to give up a lot of money again. In the past few weeks, landlords, suppliers and other creditors such as the federal government have registered claims totaling 886.1 million euros. It is expected that only up to 22.5 million euros – that’s 2.5 to 3 percent – will flow back to them. Payments from the claims against the previous owner, the Signa Group of entrepreneur René Benko, could increase the quota even further. Because the financially troubled parent company failed to provide promised help, Galeria slipped back into insolvency at the beginning of the year.
The Economic Stabilization Fund (WSF) receives more money back. The state stabilization fund helped Galeria with 680 million euros in 2021 and 2022. A large part of the claims were no longer applicable as a result of the insolvency proceedings concluded in 2023. A so-called subordinated loan of 88 million euros was continued. Because new securities were agreed in the event of default, the WSF has “priority separation rights” from the insolvency estate. The responsible finance agency expects that the claims will now be fully met. No further defaults are expected as a result of the new bankruptcy.
The insolvency administrator has laid the foundation for the new beginning. Denkhaus’ main goal was to make the group more of a medium-sized company. The company headquarters in Essen will be closed. In 2025, the administration will move – significantly streamlined – to a branch in Düsseldorf. Of the 92 branches, 76 will remain. This will reportedly reduce the rental burden by around 80 million euros per year. The name will also change. In future, the department store chain will be called Galeria, and the large, traditional brands Karstadt and Kaufhof will disappear. They are too closely linked to the recent bankruptcies, it is said.
And yet doubts and uncertainty have not disappeared even with the creditors’ yes. This is also because many important questions still remain unanswered. How does Galeria get back on the road to success? How do you compete against retail giants like Amazon and new portals like Shein and Temu? And how can the department store company be prevented from falling into difficulties again in 2025?
Beauty products, handbags, shoes and underwear should be the focus of the range. Galeria boss Olivier Van den Bossche recently announced this. Not much more is known about the future course. The new owners have so far kept a low profile publicly. They said they wanted to wait until the process was completed. However, Beetz has recently been heavily involved in the background. He campaigned for the Galeria branch in Mannheim to remain, which is on the closure list. Beetz has close ties to the city; he grew up in Mannheim and is president of the local third division soccer team SV Waldhof. It is not yet clear whether this location and others will be taken off the list again.
The decisive factor will be what Beetz and the investment company NRDC around the former Kaufhof owner Richard Baker and son Jack put into the department store chain. The insolvency plan states that they have guaranteed “extensive financial resources” for restructuring and realignment, not how much. “The new owners still have to show that they are serious. This is not clear from the insolvency plan,” said insolvency expert Manfred Hunkemöller.
Investors have heard that up to 100 million euros will flow in the next two to three years. Whether that is enough is at least questionable. Retail experts estimate Galeria’s investment needs to be over one billion euros.
With regard to the future of the department store company, much remains unclear. However, one thing has been certain since that day: Galeria will have another chance.