Galeria Karstadt Kaufhof placed in administrative insolvency
The German department store chain Galeria Karstadt Kaufhof filed for administrative insolvency in order to give it time to restructure. The company has been in trouble for some time as the department store format has come under intense pressure from rapidly changing shopping habits and the rise of on-line retail. But the closure of all non-essential stores beginning in mid-March has cost the company a reported €80m per week in sales. Despite intense efforts to win government aid, Galeria Karstadt Kaufhof found the job of getting banks on board to fund its survival difficult and time-consuming. CFO Miguel Müllenbach said that in essence time had run out and forced it into seeking court protection. The company also said it would be one of the retailers who would not pay rent as of April 1, per Germany government policy and would demand a return of advance rent paid for the last two weeks of March.