On Sept. 1, the creditors of Galeria Karstadt Kaufhof (Galeria or GKK), by far the biggest department store chain operation in Germany, voted by a large majority in favor of a settlement that would reportedly write off about 95 percent of the amounts they are owed. Meetings with the creditors of Karstadt Sports and Galeria’s other subsidiaries are scheduled to take place on Sept. 4.

It will be a big sacrifice for suppliers, landlords and other creditors who are not covered by insurance to waive more than €2 billion worth of debt, but the alternative would have been the liquidation of Galeria. In exchange, Signa Retail, which owns GKK, has agreed to inject a three-digit-million amount into the group.

GKK went into voluntary insolvency on June 30, after obtaining protection from its creditors on April 1. Frank Kebekus was appointed by a court in Essen as the administrator of the group. The proceedings also affect Karstadt Sports.  Kebekus is optimistic that the insolvency proceedings may be concluded successfully at the beginning of October, securing more than 16,000 jobs.

Signa Retail had threatened to shut down 62 of the group’s 171 department stores and 20 of its 30 Karstadt Sports stores as part of its reorganization program. After discussions with the landlords, Signa is currently planning to close 47 department stores, implying that 5,000 employees will lose their jobs. The situation with regard to Karstadt Sports is less clear, but recent reports indicated that at least two of its stores may be allowed to continue to operate, following successful negotiations with their landlord, which is funded by the Catholic Church. However, the chain’s famous location on Cologne’s Schildergasse, not far from a rival SportScheck store, is likely to be shut down.

Based in Austria, Signa owns 100 percent of the shares in Galeria, which recently bought the big SportScheck chain. The management of Karstadt Sports and SportScheck has already been centralized, and the logistics should follow, as we have already reported. We have also reported before that Stephan Fanderl has indicated his intention to step down as chief executive of Galeria, due apparently to health problems. Miguel Müllenbach, the group’s 44-year-old finance director, has been appointed as his successor.