The district court in Essen, Germany, has opened insolvency proceedings for the last major German department store chain, the Gallery. The court gave the go-ahead for the self-management process on Wednesday after the restructuring plan was submitted to the court in time, the company said. The department store giant is owned by Austrian investor Rene Benko’s multibillion-dollar Signa Holding.
The management with the German general representative Arndt Geiwitz can now proceed with the restructuring of the Galeria company, Frank Kebekus was confirmed as administrator of the department store chain. The restructuring concept envisages the repositioning of the Gallery with a range of products more strongly geared towards local needs. This also includes the integration of mobile, online and branch shopping options. It is not yet clear what the branch network will look like in the future – conversations with the owners continued. Geiwitz originally announced last year that over the course of January it would likely become clear which of the 131 department stores would have to close its doors. According to insider information, that probably won’t be the case before March.
The Gallery also stated in mid-January that there were several competitors for the group’s department stores. Discussions with potential buyers are ongoing. This is one of the reasons why it is still unclear how many department stores could be preserved. “It is now particularly important that the investor himself, Rene Benko, takes responsibility for the future of department stores, for the future of jobs and therefore the people of the Gallery,” warned Stefanie, board member in charge of retail at Verdi charity Berger . A viable concept and corresponding investments are required. Benko is also on the train.
Benko is regularly in the spotlight because of his real estate deals, the Signa Group’s business practices, his apparent proximity to politicians and his claim to political influence in his native Austria. He wasn’t just criticized for dealing with the Karstadt Kaufhof Gallery in Germany. The actions of its chain of Kika-Leiner furniture stores in Austria have also drawn criticism. During the corona pandemic, the Austrian state supported the furniture store group with several million euros, and the furniture retailer also sent almost all 4,200 employees on short-term work.
It wasn’t until the fall of 2022 that there were house searches on the Signa Group. The WKStA is investigating Benko on suspicion of bribing former Öbag boss Thomas Schmid. Schmid accuses Benko of having offered him a job at the Signa group if, in return, Schmid gets tax issues worth millions “on track” for him. The presumption of innocence applies, Benko denies all charges.
Mostly debt financed
Benko’s empire is largely leveraged. The entrepreneur is also involved in the Chrysler Building in New York, the luxury department store Selfridges in London and KaDeWe in Berlin. The business magazine “Trend” estimates the 45-year-old entrepreneur’s worth at 4.9 billion euros. This makes him one of the richest Austrians.
“Focus, prioritization, efficiency and speed are the clear guidelines that management must now consistently implement,” Geiwitz announced Wednesday. If this succeeds, the Gallery will have “a positive future in Germany”. Administrator Kebekus also sees “very good chances that the meeting of creditors, scheduled for the end of March, will also approve the plan”. After opening the process, the Gallery now has to pay wages and salaries of its own employees again; the insolvency money was paid through the German Federal Employment Agency (BA) within the last three months.
German Economy Minister Robert Habeck said in Berlin that he did not want to comment specifically on the insolvency proceedings. The German government supported the company twice during the Corona period – due to the special importance of the branches for the inner cities. “However, there are structural issues that could not be resolved during this support period,” he added.
Galeria Karstadt Kaufhof entered insolvency proceedings more than two years ago. At that time, around 40 of the 172 branches were closed, with around 5,000 employees losing their jobs. (Portal)