German department store giant Galeria Karstadt Kaufhof said on Tuesday it had filed for insolvency following the collapse of its parent Signa amid a real-estate crisis in the region.
Galeria, Germany's most prominent retailer, said it was seeking a new owner after being hit by the problems at Signa, the insolvent Austrian-based property empire that has become the biggest casualty so far in Europe's real-estate crisis.
It is the third time that Galeria, with 15,000 employees, filed for insolvency in recent years. The pandemic pushed it to file in 2020, and soaring inflation and energy costs in the wake of the Ukraine war hit it again in 2022.
This time, Galeria's troubles stem from its owner Signa, which had committed to providing Galeria with 200 million euros ($218.62 million), a payment that became unlikely in light of its troubles.
"The numerous insolvencies of the Signa Group are massively damaging Galeria," Galeria said in a statement. Signa did not immediately respond to a request for comment.
The holding company of Signa - a group of some 1,000 companies, with high-profile projects and stores across Germany, Austria and Switzerland and a stake in New York's Chrysler Building - filed for insolvency late last year with around 5 billion euros in debt.
Other Signa businesses have since followed suit, including some of its biggest divisions, prompting banks, insurers, pension funds and other investors to try to recoup some of the billions lost.
In the aftermath, Signa founder Rene Benko, one of Europe's most prominent property tycoons, was removed from a ranking by Forbes of the world's billionaires, and construction of a Hamburg skyscraper and other projects have been halted. Objects ranging from Signa's leather-covered boardroom table to toilet brushes from its Vienna offices are being auctioned off.
Since 2020, Galeria has shut stores and laid off staff but Signa's problems became too much too bear.
Galeria said it was seeking a change in ownership and that talks with potential investors had already begun.
"The insolvencies of the Signa Group have thwarted the positive development of Galeria and threaten the company," said Stefan Denkhaus, Galeria's court-appointed insolvency manager.
For years, the property sector in Germany and elsewhere in Europe boomed as interest rates were low and demand strong.
But a sharp rise in rates and costs has put an end to the run, tipping developers like Signa into insolvency as bank financing dries up and deals freeze.
($1 = 0.9148 euros)
