Ailing German department store chain Galeria Karstadt Kaufhof has begun insolvency proceedings in a court in the western city of Essen, with negotiations with new potential investors ongoing.
The court opened the proceedings on Monday but announced the move via press release on Tuesday. Lawyer Stefan Denkhaus is to continue as insolvency administrator for the troubled retail firm. He had previously served in that role on a provisional basis.
With the opening of the proceedings, Denkhaus will now take over management of the department store chain's business. He said he plans to complete a sale of the company to new investors over the course of the current month.
Talks with a new potential owner for Galeria Karstadt Kaufhof are already under way, with four bidders submitting initial bids several weeks ago, Denkhaus said. Final negotiations are now being held with two of the bidders.
"Both interested parties have extensive experience in the German retail sector and also have the necessary funds for the upcoming investment," Denkhaus said without disclosing the names of the potential investors.
The final decision on a takeover by a new owner is to be made by the chain's creditors at a meeting, which has been announced for May 28 in Essen.
Like other department store chains, Galeria Karstadt Kaufhof has struggled for years as commerce has increasingly moved online. The chain was most recently owned by Austrian real estate mogul René Benko's troubled Signa Holdings empire, which collapsed last year.
Galeria Karstadt Kaufhof filed for insolvency at the Essen district court at the beginning of January, the chain's third bankruptcy filing in the past three and a half years.
The number of stores has halved during that time period, falling to just 92. It remains unclear how many will survive the latest bankruptcy.
Denkhaus said last week that the current plan is to maintain at least 60 stores, but just how many more might be saved remains unknown at present.
"We are trying to maintain the best possible store network and are really fighting for every store," said Denkhaus, but he added that the survival of the remaining Galeria Karstadt Kaufhof locations depends heavily on negotiations with landlords to reduce rent.
Benko's Signa Holdings is among the landlords to the stores.
Galeria Karstadt Kaufhof stores form a key part of central shopping districts in many mid-sized German cities, and the chain's latest bankruptcy has caused major concern for civic leaders.
