The department store chain Galeria has filed for bankruptcy for the fourth time since 2020. Creditors and the state have so far waived almost five billion euros - the employees have given up wages and security. It remains to be seen whether there will be insolvency money this time.

Galeria opened one at the Düsseldorf district court on Fridayinsolvency proceedingsrequested. The company announced that operations in the 83 remaining department stores will continue for the time being. It didn't give any reasons. For the approximately 12,000 employees who were informed this morning, it is unclear for the fourth time in six years whether their jobs will be retained and who will pay their wages in the coming months.

The trade expert Gerrit Heinemann from the Niederrhein University commented to theHandelsblatt, at Galeria the next insolvency will be filed “on time every two years”. Thechroniclesupports this finding: 2020, 2022, 2024, 2026. Each procedure followed the same pattern. Closing lists were published, landlords, municipalities and creditors were pressured to make concessions, employees gave up their jobs and the state helped. After that, it took around two years until the next application.

Who has paid so far

The balance of the three completed proceedings can be quantified: In 2020, the creditors gave upa good two billion euros, 2022/23 to 1.3 billion, 2024 to a further 860 million. Unsecured claims were last reportedtwo to three and a half percentserved.

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The federal government, for its part, provided 680 million euros in 2021 and 2022 through the economic stabilization fund, based on the lockdowns and the importance of department stores for inner cities. Of which arelost around 550 million euros. There were additional costs from the second procedure alone96.8 million euros insolvency moneyfrom the Federal Employment Agency, which was used to pay three monthly salaries for the workforce.

Overall, the waiver from creditors and the state adds upalmost five billion euros. Branches also closed in each round: around 40 in 2020, 47 were on the list in 2023, and 9 closed in 2024.

The insolvency spiral from the worker’s perspective

The workforce has been since 2019around 32,000 to 12,000shrunk. Those who stayed suffered losses. The restructuring collective agreement from the end of 2019 already saw thisWaiver of vacation and Christmas bonuses until 2025before. According to the ver.di union, many Galeria employees earn money todayup to around 30 percent lessthan their colleagues in retail with a flat rate. Ver.di board member Silke Zimmer spoke on Friday of “hair-raising management errors” and accused the shareholders of not having made sustainable investments.

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The question of insolvency money is particularly uncertain this time. The federal agency pays for itlast three months before the opening of proceedingsif the employers are insolvent. However, Galeria is still under judicial plan monitoring from the third procedure until the end of July 2027. A spokesman for the Federal Agency had already stated in June that in this case there would be a new paymentmost likely excluded, but each case is examined individually. According to Handelsblatt, insolvency money is common for restartsfirmly planned, because the company saves on labor costs during this time. This time this buffer may be missing.

According to company sources, the September salaries were only paid on September 30th. AfterHandelsblatt informationThe owners are said to have injected more money in August, but the lender did not provide any further funds after that. This information is based on insiders and is not confirmed. What is proven, however, is that, according to industry circles, Galeria did so during plan monitoringhas satisfied all creditor claims– until the end. The160 million credit lineAccording to this information, the amount from June was largely spent on old loans and rent arrears.

If, as company circles say, it is a standard insolvency without self-administration, the insolvency administrator can terminate employment relationships with a notice period ofa maximum of three months to the end of the monthterminate, regardless of collective bargaining protection against dismissal (Section 113 of the Insolvency Code). A social plan in insolvency proceedings is required by lawtwo and a half months' earningslimited per affected person (Section 123 InsO).

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SPD General Secretary Tim Klüssendorf now called on Federal Minister of Economics Katherina Reiche (CDU) to fight for a future for the company. The employees should not be allowed to “suffer for years of management mistakes” again, he told the companyFocus. This means that the question of renewed state aid arrived in political Berlin on the day the bankruptcy was declared.

The lever

In July Galeria33 branches put to the testand their continued existence is expressly linked to rent discounts and the accommodation of landlords and municipalities. The rental agreement is about to expire in only nine of these houses. The remaining 24 settled outside of bankruptcyonly against high advance paymentsfinish. With Friday's application, Galeria can now unilaterally terminate these contractsthree month period(§ 109 InsO). The landlord only receives a claim for damages as an insolvency creditor, which would be paid at rates in the single-digit percentage range.

Braunschweig shows how effective this pressure is. According to the city, Volksbank Brawo, as the owner of the Karstadt property, made extensive concessions there on September 24th and the location was considered secured until 2028. Eight days later, Galeria filed for insolvency. Mayor Thorsten Kornblum (SPD) called it one“Slap in the face”and accused the company of confronting municipalities with recurring closure announcements and landlords with ever-new demands. Similar concessions were made in the year2020 in Frankfurtand2023 in Bayreuth, Erlangen, Oldenburg, Rostock and LeipzigHouses taken off closure lists.

Why the municipalities are giving in

The cities' fear has a basis: after oneInvestigation by city planner Nina HangebruchAccording to the ILS Institute for Regional and Urban Development Research, the number of department stores in Karstadt, Kaufhof, Hertie and Horten has fallen from 394 to 83 since 1994. Of the 92 houses that have been closed since 2020, only ten were still being used in September 2025, and 13 were being renovated. There would be little to no interest in about half of the empty buildings.

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According to Hangebruch, long periods of vacancy reduce the frequency and image of entire city centers. Many municipalities are now acting as tenants, intermediate investors or users themselves. The hope of converting empty department stores into living space has so far hardly been fulfilled: a study by the empirica institute on behalf of the real estate association ZIA found in onlyeight of 56 former department stores are apartments, around 350 in total.

In July, the German Association of Cities called for the affected municipalities to be included in the discussions and warned against one“Downward spiral”. In 2021, the federal government launched the “Sustainable inner cities and centers” program250 million euroshung up. North Rhine-Westphalia presented in 2023five million eurosready for conversion concepts after Galeria closures. The public sector therefore pays in two places: for the maintenance of the houses and for the consequences of their closure.

The open question

The German trade association had declared Galeria to the federal government in 2021systemically relevant for the inner citiesdesignated and advertised for the loan. The Ministry of Finance defended the aid until 2024 with the argumentDowntown revitalization. Heinemann now expects massive political pressure from the municipalities to continue operating as many houses as possible. He considers Galeria itself in its current form to be incapable of being renovated. Johannes Berentzen from the trading consultancy BBE sees it differently40 to 50 locations considered viablebut only with a strategic investor and a different concept than the full range.

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The decision comes at a phase in which the federal government has announced a consolidation course and at the same time is funding a fuel discount from October 1st, the federal and state governmentsaround 2.5 billion euroscosts – but primarily benefits the oil companies.

It remains to be seen whether the state will support Galeria again. What is certain is who has to endure the time until the decision is made: 12,000 employees who have been there for six yearsfrom procedure to procedurelife.

The postFourth bankruptcy filing: At Galeria, the same people always pay in the endappeared firstperspective.