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Berlin Galeria Branch

Photo: Jochen Eckel / IMAGO

The department store chain Galeria Karstadt Kaufhof is preparing for a possible insolvency of its parent company Signa Holding and its German subsidiaries. Although Galeria had fulfilled its financial obligations to the German Signa subsidiaries up to and including November, it wanted to make rent payments in December dependent on the situation and, if necessary, suspend them. This was reported by the »Süddeutsche Zeitung«, citing company circles.

It is now being monitored very carefully how the situation develops, it added. Accordingly, Galeria's rent payments are not made directly to Signa in Austria, but to various companies in Germany. As a result, the department store chain is bound by deadlines in German insolvency law.

On Friday, one of the German subsidiaries, Signa Real Estate Management Germany, had already filed for insolvency at the district court in Charlottenburg, the SPIEGEL and »News« had reported and quoted from the insolvency application.

High rents from Galeria to Signa

On Saturday, the »Wirtschaftswoche« quoted from an employee letter in which the company itself informs about the insolvency. The "current economic situation" of the company and the "fact that, despite the best efforts, it has not been possible to improve our financial situation and the necessary liquidity in the short term, have unfortunately left us no other option than to go down this path," it says. A provisional insolvency administrator is "expected to be appointed by the local court at very short notice". The salaries of the employees are now secured for up to three months through the insolvency benefit.

Several divisions of the group of companies, which was founded by the Austrian real estate investor René Benko, especially in the real estate sector, had recently run into difficulties. At the beginning of November, Benko relinquished the management position in his Signa Holding and handed over the chairmanship of the group's advisory board to restructuring expert Arndt Geiwitz. Again and again, insiders had recently critically pointed out that Galeria had to pay excessive rents to Signa.