After the Galeria department store chain went bankrupt again, it was unclear for days whether employees could continue to be paid. Now it is clear: you will receive insolvency money from the Federal Employment Agency. It should be pre-financed through a bank so that it can be paid out quickly. This means that business operations can continue for the time being. An overview.
Why do employees receive insolvency benefits?
The Federal Agency must determine the claim if all legal requirements are met. Approval for pre-financing is usually only granted if a significant proportion of the jobs are retained, for example through a viable continuation concept or serious buyers.
Insolvency experts were initially skeptical about the chances of receiving insolvency money. Accordingly, it should not actually be paid because the department store chain's payment problems from the bankruptcy in 2024 have not yet ended, as it was said.
This argument is probably decisive for the payment: Although this is the fourth insolvency application for Galeria since 2020, it is formally the first for the new legal entity. The business operations were transferred to a new company two years ago. Galeria S.à r.l. & Co. KG filed for insolvency proceedings on October 2nd - not Galeria Karstadt Kaufhof GmbH, which filed for bankruptcy in 2024 and is still in plan monitoring. Therefore, insolvency money can be paid.
According to the latest information, the retail chain employs 11,250 people, around 1,600 of them in food departments and in the restaurants of the department stores. The company's subsidiaries also filed for bankruptcy proceedings. According to experts, without insolvency money, Galeria might have been threatened with premature closure.
When did the employees last get money?
End of September. According to reports, Galeria pays a total of almost 25 million euros per month. The money is financed through a levy from employers.
What do experts say about this?
Trade expert Boris Hedde from IFH Cologne sees the approval of the insolvency money as good news for employees, but not for the future of the city centers. "Especially against the background of the original goal of supporting the goods group to maintain inner-city locations, the question arises: Are repeated and cost-intensive support campaigns actually a sustainable therapy or ultimately just another Band-Aid?"
Jörg Funder from Worms University is also skeptical about a possible continuation. "What exactly should the future be? Same business model, just smaller?" Sustainable department store models required new solutions. Perhaps only in locations where the department store can also play a local supplier role, said Funder.
What's next?
The court had ordered preliminary insolvency proceedings. The provisional insolvency administrator Frank Kebekus is now checking whether there are reasons for opening insolvency proceedings and whether the procedural costs are covered by the debtor's assets. It usually takes up to three months for the court to make a decision.
It is unclear whether and which locations will close. The decisive factor for Galeria's future will be whether Kebekus manages to find a new investor. In July, the company announced that it would review 33 department stores and close them if necessary. The decision was still pending at the end. People familiar with the situation can imagine that many more locations could be closed.
Can customers continue shopping at Galeria?
Yes, with restrictions. Operations in the 83 branches will continue for the time being. Vouchers are currently no longer accepted. Customers also cannot buy everything that is on the shelves. Some areas, such as clothing, are cordoned off with tape. “This brand is temporarily not for sale,” signs read. The goods in question still belong to the suppliers; Galeria only pays for them after the sale. However, because of the bankruptcy, suppliers want to prevent their items from being sold without receiving any money for them.
How did you file for bankruptcy?
Galeria was already running out of money in the spring. Landlords complained about missing rent payments. Management referred to liquidity fluctuations. It was only in June that the department store chain received new loan financing of up to 160 million euros. The credit line provided by the US investment company Gordon Brothers was linked to a restructuring plan that already envisaged further closures.
