These are important days for the insolvent department store chain Galeria Karstadt Kaufhof and also for the provisional insolvency administrator Stefan Denkhaus. In the fight to save the company, he has taken a step forward in finding a new owner. “There are people who want to invest in Galeria – not just one, but several. And that’s absolutely good news,” he says. This shows that the department store has a future despite all the prophecies of doom.
The sale of Galeria is far from complete and the process has not even begun. Nevertheless, Denkhaus felt some relief and satisfaction in the conversation. The deadline for submitting binding purchase offers expired at the weekend. According to Denkhaus, four have been received and he now wants to finalize negotiations with two interested parties after consultation with the creditors’ committee. Together with Galeria boss Olivier van den Bossche, Denkhaus gives some details about the status of the sales process.
Who are the prospective buyers?
Denkhaus and van den Bossche do not mention the names of the possible investors. Just this much: Both interested parties have great experience in German retail and have the necessary financial resources. This makes it possible to “continue Galeria as a whole,” says Denkhaus.
According to him, these are companies with a German background and international financing partners, but not financial investors. Two questions were crucial in the selection: Do the interested parties have the financial strength to stabilize Galeria and lead it into a good future? And: Is the transaction security of the offer in April guaranteed? This is the case with both remaining bidders.
Struggle to save the branches
It is still unclear how many of the current 92 Galeria branches will remain. Denkhaus and van den Bossche are sticking to the red line: the goal is 60 plus X. “We are trying to maintain the best possible branch network and are really fighting for every branch,” asserts Denkhaus. Rent negotiations play an important role in this. The focus is on the branches in Signa properties, where Galeria says it pays up to 35 percent of sales as rent.
Denkhaus sees the negotiations on the right track. Depending on the branch, he aims for a sales rent of seven to eleven percent, perhaps a little more in the flagship stores. “It makes no sense to continue a branch with a rent burden of more than 30 percent, and we can’t find anyone to do that,” says Denkhaus. He recently announced that locations would have to be closed if there was no accommodation.
Meanwhile, business in the branches continues as normal. Customers can expect the fall collections to also find their way onto the shelves at Galeria. The seasonal goods have already been ordered, says van den Bossche. Despite the bankruptcy, there are no problems with suppliers. It helped to be able to give suppliers “confirmation that 60 plus X branches should be retained”.
Even if the majority of the branches were to remain, many of the 12,800 Galeria employees would have to fear for their jobs. Denkhaus is keeping a low profile: That depends on the discussions with the landlords and how many locations remain.
What’s next?
Denkhaus becomes a little clearer with regard to the company headquarters in Essen. “Unfortunately there will have to be a reduction in workload here.” Galeria has to be a medium-sized company, but in Essen there are still “corporate structures” in some cases. Discussions with the general works council are ongoing, and this also applies to the search for a new company headquarters. “Personally, I would prefer that we be as close to our customers as possible in a branch,” says van den Bossche.
“Our schedule is quite ambitious,” says the Galeria boss. The company wants to overcome an important hurdle on the way to rescue in the coming week. According to its own information, Denkhaus has submitted a report to the Essen district court, where the department store chain filed for insolvency in January. If the reasons for the application are given and the costs of the procedure are covered, the responsible court can open the insolvency proceedings at the beginning of April. The creditors can then register their claims against Galeria.
If the court appoints him as insolvency administrator, Denkhaus will initially take over the business. In addition to discussions with landlords, he leads negotiations with both prospective buyers. They offer for the restructured company. How this is specifically designed will be stated in the insolvency plan that Denkhaus will draw up. The lawyer wants to sign the majority of the rental agreements and addenda in April – as well as certify the sale with the investor at the notary. “This is the golden gate through which we must pass,” he says. However, a sale is only possible if the creditors’ meeting in May approves the insolvency plan.
