Galeria employees may receive insolvency wages despite recent 2024 restructuring

Legal transfer opens path to wage support

Galeria workforce representatives are awaiting a decision from Germany's Federal Employment Agency regarding statutory insolvency wage benefits following the department store chain's fourth bankruptcy filing in six years. While insolvency law specialists initially considered renewed payments barred because the 2024 restructuring remains under active court supervision, a transfer of operating business may clear legal hurdles. Commercial register entries at local courts in Düsseldorf and Essen indicate that operational activities were shifted from Galeria Karstadt Kaufhof GmbH to a separate legal entity, Galeria S.à r.l. & Co. KG. Because this operating entity is not registered under ongoing plan monitoring, staff technically qualify for state-backed wage guarantees.

A transfer of business operations to a new company is unusual. Why that was done at the time, I do not know.

Legal scholars note that precedent from the Federal Social Court allows an employer transfer during restructuring to constitute a distinct insolvency event. Gregor Thüsing, a law professor in Bonn, pointed out that preliminary insolvency administrator Frank Kebekus must establish that the restructuring setup does not represent an abuse of law.

Even if the exact requirements have not yet been spelled out by courts: The insolvency administrator can rely on this, and he will if necessary have to demonstrate that this is not a case of legal abuse.

Payout mechanisms and agency expenditures

Preliminary administrator Frank Kebekus formally applied for insolvency benefit disbursements, aiming to arrange pre-financing through a commercial bank to accelerate wage payments. The monthly wage bill for the retail chain reaches nearly €25 million. Across 83 department store branches, the petition directly affects approximately 12,000 employees, though some initial German press dispatches reported an erroneous count of 83,000 staff. Insolvency compensation in Germany is funded through an employer levy rather than tax revenues, meaning competing businesses finance the statutory fund. The Federal Employment Agency projects spending €1.5 billion on nationwide insolvency benefits in 2026, compared to €1.7 billion in outlays in 2025. Galeria employees previously received three-digit million euro totals across three prior insolvency cycles since 2020.

Liquidity shortages and internal disputes

Cash constraints emerged earlier in the spring when landlords lodged formal complaints over missing rent payments, which management attributed to liquidity fluctuations. To stabilise operations, Galeria secured a loan facility of up to €160 million in June from US investment firm Gordon Brothers, backed by retail inventory. Disagreements between ownership and the executive board led by Tilo Hellenbock subsequently escalated into public disputes. Co-owner Bernd Beetz criticised the executive leadership in comments to Bild newspaper, stating that the insolvency filing was avoidable.

Employees have directed criticism toward both management and the ownership group. Store workers fault Hellenbock's management team for failing to implement new operational concepts, while criticising owners for injecting insufficient equity following the 2024 acquisition despite urgent capital requirements. In numerous retail branches, deferred investment has left escalators and customer elevators out of service.