Embattled German retail group Arcandor AG filed for insolvency with a court in Essen on Tuesday after weeks of pleading for state aid came to nothing. The collapse of the company, which owns the Karstadt department store chain and the Primondo mail-order group, will affect around 43,000 employees. The Thomas Cook travel group, in which Arcandor holds a 53% stake, will remain outside the insolvency proceedings.
Embattled German retail group Arcandor AG filed for insolvency with a court in Essen on Tuesday after weeks of pleading for state aid came to nothing. The collapse of the company, which owns the Karstadt department store chain and the Primondo mail-order group, will affect around 43,000 employees. The Thomas Cook travel group, in which Arcandor holds a 53% stake, will remain outside the insolvency proceedings.
Karstadt is Germany's oldest department store chain with 127 stores in prime inner-city locations. German retailer Metro told ZDF television on Tuesday it was still interested in taking over around half the Karstadt stores and merging them with its Kaufhof chain to form a German market leader. Exploratory talks to this end were held between the two companies at end-May. Together, Karstadt and Kaufhof would have 206 department stores and 40 specialised sports shops at some 250 locations.
Arcandor said it was forced to file for insolvency after requests for state loan guarantees and rescue aid were rejected and further requirements could not be fulfilled. With loans totalling EUR 710 mln due to mature on 12 June 2009, the company's financial position had become acute. The insolvency proceedings will allow Arcandor to continue restructuring the company and its subsidiaries while under court protection from creditors.
Arcandor's management board chairman Karl-Gerhard Eick commented: 'Even as the insolvency proceedings are ongoing, we will continue to fight to save as many jobs and locations as possible and to offer a good future for our traditional, valuable German brands.' Arcandor's main shareholders, Bankhaus Sal. Oppenheim and the Madeleine Schickedanz pool, are committed to the continuation of the company.
The Essen District Court is expected to decide on the further course of the insolvency opening proceedings and appoint an insolvency administrator today. No information can be given on further details at this time. If further information emerges today we will release a statement to the press.
