Galeria staff receive insolvency benefit after fourth insolvency filing in six years
The Federal Employment Agency has approved insolvency benefit for staff of the Galeria department store chain, to be pre-financed by a bank. Whether any of its 83 stores will close is still open.
Benefit approved despite doubts
Galeria's employees will receive insolvency benefit (Insolvenzgeld) from the Federal Employment Agency (Bundesagentur für Arbeit, BA), dpa reported on 13 October. The agency gave no details when first asked and referred questions to the provisional insolvency administrator, Frank Kebekus. A bank will pre-finance the payment so that the money reaches employees' accounts quickly, which meets a condition for keeping operations running for now. Insolvency benefit is paid once, for a maximum of three months before proceedings open, and is normally paid retroactively. It generally matches net pay. The claim only arises when proceedings open, which is why banks pre-finance it through an assignment of claims. The benefit is funded by a levy paid collectively by all employers. Staff received their September salaries from the employer at the end of September.
Why the decision was disputed
Galeria remains under plan monitoring (Planüberwachung) until mid-2027, a period after the previous insolvency in which the company has to prove itself. In the summer, a BA spokesperson had said companies in this phase normally cannot receive insolvency benefit, though each case is checked individually. Handelsblatt reports that after the third insolvency the business was transferred to a new operating company, while plan monitoring applies only to the old company, which may have been the loophole that made approval possible. Before the decision, insolvency experts had been skeptical about the chances of insolvency benefit. Alexander von Saenger of Schultze & Braun, a lawyer specialising in restructuring labour law, described the pressure on the decision:
There is enormous political pressure on proceedings of this size, and that is also decided high up in the Employment Agency.
Von Saenger said that legally much had spoken against approval. If the old and new companies had the same staff and stores, they would have to be treated as one legal unit, and rent payment problems well before the filing were a strong sign that Galeria was not yet solvent again.
Filing, court order and store network
Galeria filed for insolvency at the Düsseldorf local court on 2 October, citing insolvency (Zahlungsunfähigkeit), its fourth filing in six years. The court then ordered preliminary insolvency proceedings in early October under case number 502 IN 258/26 and appointed Kebekus, who had also served as Sachwalter in the 2020 and 2022 proceedings. The company now has its headquarters in Düsseldorf. Since summer 2024 it has been owned by the US investment firm NRDC and an investment company of entrepreneur Bernd Beetz, who holds 28.2% of the company. The 83 stores continue trading for now, and whether any locations must close remains open. Subsidiaries have also filed for insolvency.
- Galeria files its fourth insolvency application at the Düsseldorf local court
- Kebekus briefs staff in a roughly 20-minute online call
- Kebekus answers the Federal Employment Agency's follow-up questions by Thursday afternoon
- dpa reports that insolvency benefit for Galeria staff has been approved
Staff figures differ between reports. dpa cites 11,250 employees according to the latest company information, about 1,600 of them working in food departments and restaurants, while Handelsblatt cites 12,000. Salaries are reported at around 25 million euros a month, and Handelsblatt, citing expert estimates, puts payments up to the December salary at 75 million euros. Three earlier insolvencies have already brought a three-figure million sum in insolvency benefit to Galeria staff.
Staff briefing and next steps
According to participants, Kebekus briefed staff in an online call of roughly 20 minutes on Wednesday, 7 October, as Handelsblatt learned. He told them that what they would read about Galeria would be unpleasant, but hinted that operations could continue even without BA benefit, in which case he could raise the money elsewhere. Employees say he has not contacted them directly since. Handelsblatt reports that the agency asked follow-up questions, which Kebekus answered by Thursday afternoon, 8 October, after which the decision was considered in Nuremberg. The payment is meant to reach employees quickly, but it remains unclear which of the 83 stores must close.
