Galeria Karstadt Kaufhof has applied for creditor protection. The department store group has set in motion the German insolvency procedure, as Esprit did earlier.
State aid came too late
On Wednesday, department store group Galeria Karstadt Kaufhof sought protection from its creditors at the Essen District Court. The court has immediately granted the request and initiated the insolvency proceedings: this means the group can now continue to function independently, while working on a recovery plan.
The department store group had previously hoped to obtain support from the German State Bank, but did not succeed to do so in time. In a statement, management claims the application procedure took too long. One of the problems is said to have been a lack of confidence from commercial banks, which had to guarantee part of the bail-out money.
Hundreds of millions
The group's management emphasises it will use the judicial protection to continue its restructuring efforts and to reposition the company for the future. Owner René Benko's Signa Group also promises to make hundreds of millions of euros available as additional financing.
The department store group is being hit hard by the corona crisis: the company says it is losing more than eighty million euros in revenue per week due to the mandatory store closures. Galeria Karstadt Kaufhof employs more than 28,000 people in Germany, but the employees already feared for their future.