Galeria Karstadt Kaufhof files for insolvency again

The new proceedings bring another restructuring of the department store chain into focus. Which stores will be affected by the insolvency and how many jobs are at stake was initially unclear. Galeria is one of Germany's most traditional department store chains and operates locations nationwide, including several stores in Bavaria.

Impact on stores and employees

The current proceedings follow a series of earlier restructurings of the company. It is only through the renewed filing that the group can conduct negotiations with creditors and landlords under court protection. Industry observers such as the retail research institute EHI have been monitoring the development of the brick-and-mortar department store business for years, with a view to shrinking footfall and rising cost pressure.

Gordon Brothers is known as a specialist in the valuation and realization of retail inventories. The company frequently appears in restructurings of major retail chains in order to quickly realize goods from ongoing product ranges. The million-euro loan was originally intended to give Galeria breathing room for a sustainable turnaround, but this plan has apparently failed.

Observers expect that an insolvency administrator will once again be appointed in the current proceedings to temporarily continue business operations. In such cases, negotiations on rent reductions, store closures, and potential investors are common. Which steps will be taken first will depend on the district court and the appointed administrator.

Structural problems of the department store business

The renewed step illustrates the ongoing structural problems of the German department store business. Rising online competition, changing consumer behavior, and high rent burdens are weighing on inner-city concepts. Galeria is a particularly visible example, as the chain is present with its large stores in many inner cities and has a direct impact on local supply.

For employees, the renewed insolvency means renewed uncertainty. In earlier proceedings, works councils and unions had pushed for social plans and site guarantees. Whether such commitments can be negotiated again remains open. Municipalities and inner-city officials are also watching the development with a view to vacancies and the attractiveness of their centers.

The proceedings in Düsseldorf have been initiated, according to the court. When an initial decision on the opening of the insolvency proceedings and the appointment of an administrator will be made was not initially known. The court also did not initially comment on the role of Susanne Jensen, who had been active as a restructuring expert for the company in earlier proceedings.