Major German department store chain Galeria Karstadt Kaufhof has avoided insolvency as creditors approved a plan to reorganize the ailing business, insolvency administrator Stefan Denkhaus announced on Tuesday.
The insolvency proceedings are thus formally close to being finalized. The district court in Essen, where the company's headquarters are located, can open the proceedings in June.
Galeria's new owners, a consortium consisting of US private equity firm NRDC and German entrepreneur Bernd Beetz's BB Kapital SA, face a difficult task in improving the fortunes of a business undergoing its third bankruptcy in the last three and a half years.
Denkhaus intends to hand over the business to them in July.
Of the approximately 12,800 people employed by the company, 1,400 are set to lose their jobs.
The trade union verdi erected a symbolic wooden cross in front of Essen's trade fair centre for each closing shop. "Mr Beetz, invest in the team," reads one of the posters. Another reads: "Benko, thank you for nothing!" referring to the previous owner, the entrepreneur René Benko.
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 an interested party would even be found.
Around 120 people took part in the non-public event in Essen on Tuesday, representing around 4,600 creditors. By accepting the insolvency plan, they will once again have to forego a lot of money.
In recent weeks, landlords, suppliers and other creditors such as the German government have registered claims totalling €886.1 million ($964 million). It is expected that only up to €22.5 million - or 2.5 to 3% - will flow back to them.
Payments from the claims against the previous owner, Benko's Signa Group, could increase the quota even further.
Galeria slipped back into insolvency at the beginning of the year because the financially troubled parent company failed to provide promised aid.
