Examiner: Money was never tight: Isn’t Galeria Karstadt really bankrupt?

Examiner: Money was never tight
Isn’t Galeria Karstadt really bankrupt?

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At the beginning of January, Galeria Karstadt Kaufhof filed for insolvency. It is the third in just a few years. Curious: The department store group is apparently not really economically threatened either at this point in time or at a later date. A secret KPMG report raises questions.

A previously confidential report from the auditor KPMG raises doubts about the legality of the current insolvency of Galeria Karstadt Kaufhof. As the business portal Business Insider reports, the auditors came to the conclusion that the department store group was never economically threatened, despite the lack of millions that the parent company Signa had promised to save it. In other words: Galeria Karstadt did not have to file for bankruptcy.

The specific question that the KPMG auditors asked themselves was what consequences the failure to receive the promised financial injection of 50 million euros at the beginning of February had on longer-term liquidity. The 50 million was the first tranche of a total of 200 million euros that Signa boss René Benko had promised as part of the group’s second insolvency. Was the failed financial injection really the final death knell or not?

The examiners’ answer: no. The consequences of not paying while at the same time withholding rent for Signa properties were manageable for the department store chain at all times, according to the report, which was prepared in November but was not yet known. Business and liquidity would have held up surprisingly well even without the promised money.

Far from critical threshold

As the Business Insider further quotes, liquidity would have fallen from 175 million to 118 million euros in February and to 109 million in March. After that, things would have picked up again: by May the financial cushion would have increased to 127 million euros, which would have corresponded to the usual course of business. The missing Benko millions would have only caused a three-month dent in the finances. The group’s critical liquidity threshold is reportedly 90 million euros. That means the financial cushion would have been comfortable.

In their report, the auditors only address certain residual risks regarding the withholding of rent. They therefore recommended that the board seek legal advice. It is said that inspectors and the board of directors at Galeria Kaufhof reacted with surprise to the result.

Things get even stranger against the backdrop of the successful Christmas business. According to the report, even the group’s top managers admit that the fact that the group filed for insolvency at the Essen district court on January 9th does not add up. They now fear that the company was not insolvent at all. At the same time, the question arises as to why the court where the application was received did not object. Was it perhaps not checked carefully enough?

What is strange is not only the fact that Galeria was never “over-indebted,” as the company claimed in an official statement, writes Business Insider. But also the fact that the bankruptcy proceedings were prepared weeks in advance. According to the information, the law firm McDermott Will & Emery is responsible for this. One of the agency’s partners is considered a close confidante of Signa founder Benko.

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