Examiner: Money was never tight
Is Galeria Karstadt not really bankrupt?
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At the beginning of January, Galeria Karstadt Kaufhof filed for bankruptcy. It was the third in just a few years. Curiously, the department store group was apparently not really threatened financially either at this point or at any later date. A secret KPMG report raised questions.
A previously confidential report by 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 have come to the conclusion that the department store group was never economically threatened despite the millions that the parent company Signa had promised to save it not being paid. In other words: Galeria Karstadt should not have filed for insolvency either.
The specific question that the KPMG auditors asked themselves was what consequences the failure to provide the promised 50 million euros in cash at the beginning of February would have for long-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 cash injection really the final death blow or not?
The auditors' answer: No. The consequences of the failure to pay and the simultaneous withholding of rent for Signa properties were always manageable for the department store chain, according to the report, which was drawn up in November but was not previously known. Business and liquidity held up surprisingly well even without the promised money.
Far from critical threshold
As Business Insider further quotes, liquidity fell from 175 million euros to 118 million euros in February and to 109 million in March. After that, things started to improve again: by May, the financial cushion would have risen to 127 million euros, which would have been in line with normal business activity. The missing Benko millions would therefore have only caused a three-month dent in the finances. The critical liquidity threshold for the group is apparently 90 million euros. This means that the financial cushion would have been comfortable.
In their report, the auditors only addressed certain residual risks regarding the retention of rent. They therefore recommended that the management seek legal advice. The auditors and management at Galeria Kaufhof were surprised by the result, they say.
It becomes even more curious against the backdrop of the successful Christmas business. According to the report, even the company's top managers admit that the fact that the company filed for insolvency at the Essen District Court on January 9th is inconsistent. They now fear that the company was not capable of insolvency. At the same time, the question arises as to why the court where the application was received did not object. Was it perhaps not examined carefully enough?
What is strange is not only the fact that Galeria was never “over-indebted”, as the company claims in an official statement, writes Business Insider. But also the fact that the bankruptcy proceedings were prepared weeks in advance. The law firm McDermott Will & Emery is responsible for this. A partner of the agency is considered to be a close confidant of Signa founder Benko.
