Essen: Decision made in favor of Galeria Karstadt Kaufhof – the group is saved

Galeria Karstadt Kaufhof in Essen saved after a long discussion

The meeting lasted over seven hours. A result was actually expected by noon. But the creditors did not make the decision easy for themselves. A lot of money is at stake for them. You are now giving up a total of 2.2 billion euros. The restructuring plan had been fighting for months, it also means that almost 6,000 jobs and 50 branches of the group will close.

Kaufhof on Willy-Brandt-Platz and Karstadt Sports in Limbecker Platz in Essen are also affected. They will close in October. The Karstadt branch in Limbecker Platz was only saved after renegotiating the rent. The Verdi union had also advised approving the restructuring plan. Losing the 5,900 jobs is better than losing them all, a spokesman told our Radio Essen city reporter before the meeting.

Creditors’ meeting Galeria Karstadt-Kaufhof to decide on the future at Messe Essen.© Radio Essen / Kostas Mitsalis

Creditors’ meeting Galeria Karstadt-Kaufhof to decide on the future at Messe Essen.

© Radio Essen / Kostas Mitsalis

Essen: Creditors of Galeria Karstadt Kaufhof forego a lot of money

With the decision to approve the restructuring plan, the creditors waived a large part of their claims. In total, it is a sum of over 2 billion euros. In addition, the creditors blessed the downsizing and the branch closings. Around 50 branches will close nationwide. Jobs are also being saved at the corporate headquarters in Schuir on the Bredeney border. In contrast, the focus is on logistics in Vogelheim.

Creditors' meeting Galeria Karstadt-Kaufhof to decide on the future at Messe Essen.
Creditors from Galeria Karstadt-Kaufhof before the decision on the future before Messe Essen.© Radio Essen / Kostas Mitsalis

Creditors from Galeria Karstadt-Kaufhof before the decision on the future before Messe Essen.

© Radio Essen / Kostas Mitsalis

Creditors’ meeting in the largest exhibition hall in Essen

The Essen district court had rented the largest exhibition hall for the creditors’ meeting under corona conditions. This is Hall 3. The meeting was not open to the public. Our Radio Essen city reporter was there. In 2009 there was a similarly large creditors’ meeting in Essen. That was the one for Arcandor, the Karstadt mother at the time. The Grugahalle was used for this at the time.

More news from Essen

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Dog salons must also remain closed

NAfter his decision on shops with more than 800 square meters, with which he rejected an urgent application by the Karstadt chain for the entire opening of the branches, the Hessian Administrative Court has again confirmed the state of Hesse’s line in terms of corona requirements. The judges rejected the request from the operator of a dog salon and a dog school to allow her to operate again. The judges also commented on the question of whether restaurants in currently closed department stores are allowed to reopen.

Thorsten Winter

Business editor and internet coordinator in the Rhein-Main-Zeitung.

According to the Administrative Court, it “did not suspend the temporary ban on the operation of dog schools and dog salons” and rejected the woman’s application for an interim order. In his decision, he refers to the fourth ordinance to combat the coronavirus of the State of Hesse. As follows from this regulation, dog salons and dog schools, among others, must remain closed. The same applies to hairdressing salons.

“Intervention proportional”

According to the explanations of the court, the woman sees herself circumcised in her constitutionally guaranteed free professional practice. However, due to the so-called summary examination offered in the urgent procedure, the regulation that it contested did not prove to be manifestly illegal. The competent senate of the court also does not consider it necessary to overturn the rule in the light of the consequences.

The requirement to close the dog school and the dog salon therefore represents a not inconsiderable encroachment on the freedom to exercise one’s profession. However, the encroachment is “justified by reasonable considerations of the common good and in particular proportionate”. It serves the legitimate purpose of protecting the health of the population and, in particular, of preventing the overloading of the health system.

Do not tempt customers to linger

The decision of the Hessian Administrative Court is uncontested. However, the time in which the applicant still has to be patient is manageable. The regulation she criticized applies until May 3 inclusive. After that, hairdressing salons can also reopen to people.

The fourth regulation also prohibits the operation of restaurants in department stores that are currently not allowed to open completely. Only areas up to 799 square meters are allowed. The operation of such restaurants is prohibited until May 10th. At the moment, restaurants are only allowed to offer food and beverages in out-of-home sales, customers have to pick them up or have them delivered.

From the VGH’s point of view, this rule is also proportionate, which is why it has rejected an urgent application against the regulation. “Restaurants – especially those located in department stores – would regularly invite you to stop shopping or to decide on a meal or a snack together,” it says. The imperative to keep the distance requirement would then not be guaranteed, the judges believe. This decision is also final.

The so-called interpretation instructions for the fourth state regulation can be found here.

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Report from the University of Bonn: Hygiene Institute considers the square meter limit to be incomprehensible

Galeria Karstadt Kaufhof criticizes the 800 square meter limit when shops reopen. An expert opinion commissioned by the department store group is now available. .

Courts reject urgent applications from Karstadt Kaufhof

OAdministrative courts in Berlin and Greifswald have rejected urgent requests against the regulations on the closure of department stores due to the Corona crisis. The Higher Administrative Court Berlin-Brandenburg (OVG) called the closure in relation to the protection of public health. The OVG in Greifswald also rejected an urgent application on Friday evening, with which a department store group wanted, among other things, to reopen its stores in Rostock and Wismar from Monday. Among other things, the ailing chain of department stores Galeria Karstadt Kaufhof had recently taken legal action in several federal states against the closure of its branches in the Corona crisis.

According to the OVG in Berlin, the urgent requests were directed against the containment regulation that was valid until Sunday. The judges decided that this was covered by the Infection Protection Act and was compatible with the Basic Law. Department stores would not have to be treated the same way as retail stores that serve the basic needs of the population and are therefore excluded from closure, the statement said. The decisions are incontestable.

In Brandenburg, smaller shops with a sales area of ​​up to 800 square meters can reopen from Wednesday, taking into account the distance and hygiene rules. In Mecklenburg-Western Pomerania, too, department stores with a sales area of ​​more than 800 square meters will remain closed.

With a view to the urgent application, the Greifswald judges argued that the department store group had to accept sensitive interferences with its rights, which also led to a massive loss of income. There is no suspicion of a violation of the fundamental right to equal treatment.

Closure “not understandable”

Karstadt Kaufhof had justified his legal action on Friday with the fact that the closure of the branches of the already troubled group to contain the corona pandemic was “a serious cut in the day-to-day business and all sales of the company”.

Urgent applications have also been submitted to higher administrative courts in North Rhine-Westphalia and Bremen. Decisions are expected there in the coming week.

The department store group is currently preparing its reorganization in a so-called protective shield procedure, which he applied for at the responsible district court in Essen in early April. In the Corona crisis, the company has already sought government aid and introduced short-time work. According to media reports, the group, which belongs to the Austrian René Benko and his holding company Signa, also does not want to pay rent for its department stores until at least June.

The administrator, Frank Kebekus, appointed in the protective shield procedure described in the F.A.Z. Incisions as probably inevitable. But he was confident that there would be “no clear cutting” in the department stores. The goal is to close as few houses as possible. Regarding the closings due to the Corona crisis, Kebekus said: “It is not understandable why furniture stores are allowed to open, but not Karstadt or Kaufhof.”

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Allegedly large tax relief planned for companies

Closed shop space

The economy should be kept running with tax relief.


(Photo: dpa)

Dusseldorf The federal and state governments are planning significant tax relief for companies due to the corona crisis. The economy could be relieved of current past losses by 15 billion euros just by changing the way past profits were offset. This is reported by the “Spiegel” on Friday evening.

The tax department heads of the federal and state finance ministries are currently advising on the generous expansion of the possibilities with which companies can offset current losses with past profits. It is conceivable to extend the so-called loss carry-back to the past five years. So far, it only applies to the previous year.

It is also under discussion to raise the amount previously capped at one million euros. So that the companies do not have to wait for the tax return next year, they should already be able to claim part of their profits from the previous year as a loss. There is a 20 percent stake in the room, which they could use to claim tax refunds from the tax offices, writes the “Spiegel”.

According to the report, the department head group is also considering postponing the payment of income tax by one month. The potential for more liquidity here would be another 20 billion euros. Sales tax payments could also be deferred, which could mean a deferral of payments totaling up to 25 billion euros. However, the payments are not waived.

The measures aim to avoid short-term liquidity bottlenecks at companies. Sooner or later the tax effects would be reflected in the state budget anyway.

The majority of companies in Germany suffer from drop in sales and production losses due to the shutdown. The global supply chains are also currently under great pressure. According to a survey available to the Handelsblatt newspaper, every second medium-sized company (51 percent) is on the verge of an economic shutdown should continue for another four weeks. More than three quarters of companies and the self-employed (76 percent) indicated that government aid paid so far was not sufficient to meet their financial needs.

Even large corporations like Adidas had recently drawn on KfW credit lines. On Friday, the Karstadt Galeria Kaufhof department store group filed a lawsuit to open its branches in order to avoid financial loss. The federal and state governments had also presented a plan on Wednesday to cautiously relax the current measures.

More: The IMF expects the worst economic crisis since the Great Depression in 1929.

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Galeria Karstadt Kaufhof is suing for department store opening

Dhe department store chain Galeria Karstadt Kaufhof has filed a lawsuit against the special rules of the state of North Rhine-Westphalia in the corona crisis. The company opposed the Coron Protection Ordinance in an urgent procedure. The state’s highest administrative court announced this on Friday. A decision is no longer expected this week, the country now has the opportunity to comment.

Jonas Jansen

From Monday onwards, only shops up to 800 square meters of retail space may open under hygiene requirements. The Karstadt and Kaufhof department stores are significantly larger, but of course they also compete with smaller retailers who are allowed to reopen. At the same time, the state of North Rhine-Westphalia has set up special regulations: For example, furniture stores such as Ikea and baby specialty stores are allowed to open. That should be the clue of the department store group to defend itself in court for unequal treatment. Retail chains and associations had already criticized that the special routes created an arbitrary distortion of competition.

All Karstadt Kaufhof department stores have been closed since March 18. “Galeria Karstadt Kaufhof loses more than 80 million euros in sales every week, while significant costs continue,” said CFO Miguel Müllenbach. “By the end of April, the loss of sales will add up to more than half a billion euros.”

On April 1, Karstadt Kaufhof, just like the subsidiary Karstadt Sports, therefore applied for a self-administered protective shield procedure, which protects it from access by creditors for three months. The bankruptcy administrator Frank Kebekus oversees the restructuring.

Karstadt Kaufhof has struggled in the struggle for government loans in recent weeks. In order to implement the state guarantees, the trading group is heavily dependent on the commercial banks, which in such cases have to assume 20 percent of the KfW loan amount as a guarantee. Karstadt Kaufhof is said to have cost around 700 million euros – which had also proven to be complicated due to the previously difficult financial situation. “This process is very bureaucratic, costs valuable time, is associated with additional hurdles – and therefore has an uncertain outcome,” said Müllenbach. “However, we cannot wait for another week of the crisis for a solution.”

That is why the department store group, which has been writing losses for years, now wants to continue its renovation under the protective umbrella. With this special case in insolvency law, the company remains able to act and can sort itself better. Although loans remove the shortage of liquidity in the short term, they are a burden for a company that, like Karstadt Kaufhof, is in the middle of a restructuring anyway.

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Karstadt Kaufhof complains about opening branches in NRW

Kaufhof in Cologne

The owner Signa merged Karstadt and Kaufhof and has been running them under the common name Galeria Karstadt Kaufhof since March.

(Photo: picture alliance / dpa)

Dusseldorf The ailing department store giant Galeria Karstadt Kaufhof is taking legal action against the closure of its branches in the corona crisis. The group has filed a lawsuit against the Münster Higher Administrative Court against the fact that department stores in North Rhine-Westphalia are not allowed to open.

According to the court, the country has now been given the opportunity to comment. A decision could be made in the coming week. A group spokesman initially did not want to comment.

Galeria Karstadt Kaufhof with its 28,000 employees is particularly affected by the store closures. Except for food and drugstore departments, which are separately accessible, all houses must remain closed due to the corona crisis.

According to the company, the company therefore misses a turnover of around 80 million euros every week. If the closure lasts until the end of April, the loss of sales should have totaled half a billion euros.

The governments had announced that the shops would gradually reopen on Monday. However, in a first step, only shops with an area of ​​less than 800 square meters are allowed to open. The Karstadt and Kaufhof stores have an average sales area of ​​12,500 square meters.

However, the state of North Rhine-Westphalia has embarked on a special route: it also allows furniture stores, including those of the large Ikea chain, and baby specialty stores to be opened. Galeria is not covered by this regulation. Several retail chains and associations had already criticized that this would result in an arbitrary distortion of competition.

Another way out remains Galeria in North Rhine-Westphalia: The state government has already announced that it should not be possible in NRW to reduce the sales area to 800 square meters by barriers, so that it can at least partially open. Other federal states, such as Lower Saxony, had promised this.

Group struggles for survival

Due to its difficult situation, Galeria Karstadt Kaufhof had applied for self-administered protective shield proceedings in early April. The protective shield procedure is considered the preliminary stage of insolvency, follows the same rules and often leads to a regular insolvency procedure.

It is reserved for companies that are not yet insolvent, but are at risk of bankruptcy. Under the protective shield, they are safe from access by creditors for three months and should therefore have enough time to organize their finances.

As has now become known, the Signa holding company of the Austrian investor René Benko sells 17 properties from the ailing department store chain Galeria Karstadt Kaufhof. The buyers are funds from the financial investor Apollo EPF. According to the Bloomberg news agency, the purchase price is around 700 million euros. That is exactly the same amount that Benko claims to have invested in Galeria as an additional capital injection.

A Signa spokesman declined to comment on Friday. The transaction was already registered for review at the Federal Cartel Office at the end of March, and the competition authorities released the sale on Wednesday this week. Signa has been the sole owner of the troubled department store group Galeria Karstadt Kaufhof and numerous department store properties of the company since June 2019.

More: Return to normality: what the relaxation of the corona rules means for the trade

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Karstadt owner Benko sells 17 properties to funds

Dusseldorf The Signa-Holding des Austrian investor René Benko sells 17 properties from the ailing chain of department stores Galeria Karstadt Kaufhof. The buyers are funds from the financial investor Apollo EPF.

According to the Bloomberg news agency, the purchase price is around 700 million euros. A Signa spokesman declined to comment on Friday. The transaction was already registered with the Federal Cartel Office for review at the end of March. The competition keepers have released the sale.

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Moody’s warns – bondholders face high defaults

Dusseldorf The risk for international bond creditors caused by Corona is given a house number for the first time: corporate bonds totaling more than $ 174 billion, the rating agency Moody’s announced on Wednesday, are currently among the financial stocks threatened by the epidemic.

This figure corresponds to the outstanding bonds of those 25 percent of the large companies rated speculatively (“non-investment grade”) by Moody’s that have lost a large part of their current income due to official orders: above all the non-food retail trade, followed by the Car industry to the leisure and catering trade.

The energy sector is also indirectly affected, which represents a further 2.4 percent of the group bonds issued worldwide. The oil price shock is throwing business on them these days.

“We will also see a contagion effect in other industries,” warns Moody’s manager Jeanine Arnold. Business service providers, chemical companies and raw material suppliers are exposed to high risks as suppliers.

Even the telecommunications sector, which is hardly affected by the corona crisis at the moment, could be affected at different times. There is usually a correlation between sales development and gross national product, observes Moody’s. With the “unprecedented shock” for the economy of the G20 countries, it is expected there, telecommunications revenues will shrink – but with a delay of one year.

Investors have suspected that the biggest failures from the non-food retail sector are to be feared, not only since the protective shield procedures for the Esprit fashion retailer and the Essen-based department store group Karstadt Kaufhof. A look at the latest reports from the rating agency Standard & Poor’s confirm the concern.

In the past two weeks alone, she has classified industry giants such as Fossil, Levi Strauss, the US department store Neiman Marcus and the British fashion retailer in this sector Matalan down – all now with a non-investment grade. S&P even certified the last two with an “CCC” rating, an acute risk of late payment. Even the hotel chains Hilton and Wyndham, which also got a speculative “BB” thanks to Corona at Easter, are still stable in comparison.

Rapid descent

For bond artists, the situation has escalated at an immense pace. Among the speculative European bonds – that is, from a rating of “Ba1” downwards – there will be a default of 7.8 percent by the end of the year, Moody’s expects. By March 2021, it could even be eight percent. In the twelve months to March 2020, however, the default rate was just 1.7 percent.

Between early March 2020 and April 9, 22 percent of all companies rated by Moody’s as “speculative” received a devaluation. Companies from retail and the automotive industry in particular were often down several levels.

“In addition, the corona crisis will significantly widen the gap between relatively financially strong and financially weak companies,” warns Moody’s manager Arnold. For example, issuers classified as moderately speculative (“Ba”) only had three devaluations between the beginning of March and April 9 that made up more than one meter, while the poorer credit ratings (“B” and below) gave 33.

Speculative issuers tend to have weaker market positions, are more geographically defined and focus on fewer customers and suppliers, Moody’s explains. In some cases, they would have a higher fixed cost share, which limits operational flexibility. This makes it difficult for them to react to the suddenly and unforeseen restrictions.

Investment grade companies, on the other hand, would typically have better access to sources of finance, often to equity. In addition, there would often be levers to limit the outflow of funds – for example through dividend cuts or the provision of investments.

Such conditions currently count not least for government aid programs. In Britain, for example, the government has made the CCFF program explicitly available to investment grade companies. In other countries, including Germany, the banks have to guarantee part of the government loans. Moody’s believe that this limits the prospects for companies that were considered “speculative” even before the corona crisis. The tour operator Tuiwho received a EUR 1.8 billion KfW loan is an exception here.

More: With Daimler, BMW and ford It hit the first: The corona crisis is causing rating agencies to downgrade car companies. It can go further down.

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The fashion industry is breaking the middle

Times are difficult for the entire German economy. And it is also understandable that everyone who can apply for government aid to survive the corona crisis. This applies in particular to the German fashion industry. Companies of Gerry weber via Bogner to Boss suffer particularly from the fact that all shops in Europe are closed.

The fashion industry is one of the big losers in the pandemic. Because if you no longer drive to the office, visit theaters, restaurants or go on vacation, you don’t feel like buying a new outfit – not even in the online shop. In the home office, part of the full wardrobe is enough, especially if you switch off the video function during the conference call.

The state-prescribed shutdown is bitter for the fashion companies. There is currently little hope that anything will change so quickly. Because the willingness to buy should hardly increase in the coming months. It can be expected that when life returns to normal, people will spend money on a lot, but not on new clothes. Short-time work or unemployment of hundreds of thousands put a considerable strain on the household budget.

However, the corona crisis is likely to be particularly difficult for some fashion companies: These are the companies from the middle of the fashion market. It meets well-known names like Gerry Weber, esprit and Tom Tailor or S.Oliver. All companies that offer mid-price t-shirts, dresses and trousers. In the past few years, they have failed to develop strategies to defend themselves against the brutal change in the fashion market.

Because they are attacked from two sides: from below by discounters like Primark, Kik and the grocery discounters Aldi and Lidl – and from above by premium and luxury brands like Marc O’Polo, Tommy Hilfiger and Gucci. A dangerous grip.

The trend to expensive or cheap in the fashion industry has been going on for some time. The discount and premium and luxury segments have been growing fastest for years. This trend is likely to be exacerbated by the corona pandemic. Either people spend as little money on clothing as possible, or they are willing to have their skirt and trousers cost significantly more. But they also demand more value for it: higher quality, perfect service, a better brand image.

Large retailers also under pressure

All providers who move between the two extremes have a hard time and lose market share. Many fashion companies are therefore trying to escape and try to upgrade their image and collection. However, this is expensive and takes a lot of time, as the example of Esprit shows. The company has been undergoing permanent renovation for years and has tried several times to improve its image with large advertising campaigns – with little success. A few days ago, Esprit had to register for self-administration.

For brands from the middle of the market, the situation is becoming more acute because important sales channels are also struggling with problems: what happens when the large operators of department stores such as Karstadt Kaufhof or Peek & Cloppenburg close branches after the corona crisis or downsize?

Because the big retailers themselves are under massive pressure to change their business concept in order to survive. It is no longer enough to set up a coffee bar, a mobile phone charging station or a cozy corner for the little ones to lure online customers back to their shops.

The buying experience must be in the foreground

They only come when retailers score with personal service, a selected collection that is not available on every corner and an intelligent combination of online and offline shopping. Above all, they must succeed in making their business a real meeting place, where it is not just a matter of selling jackets, handbags or sneakers.

The buying experience must be in the foreground, as Breuninger or the Kadewe Group demonstrate. The motto also applies in retail: he has to choose between expensive or cheap.
The fashion industry must not go any further when it comes to sustainability. It is not enough to compete with each other with new seals for green fashion. Instead of throwing more and more organic cotton onto the market, for example, it makes more sense to improve the quality of the collections – according to the motto: less is more.

That would also be an opportunity to reduce the discount madness in the industry to a healthy level. This would even help some fashion companies from the middle of the market to survive in the post-Corona era with new concepts.

More: After Adidas and Deichmann, other companies announce that they will pay less or no rent.

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