Galeria Karstadt Kaufhof stands accused of having become insolvent much earlier than claimed. Employees who have been made redundant are still waiting in vain for severance pay.

The public prosecutor's office in Essen has initiated investigations against the management of Galeria Karstadt Kaufhof (GKK) on suspicion of dragging out insolvency proceedings, according to Süddeutsche Zeitung. Investigators are looking into allegations that GKK was insolvent as early as January 2020, rather than March 2020. The department stores' group had filed for insolvency in self-administration weeks later, at the beginning of April.

One indication of the insolvency delay is that GKK had not paid social security contributions in several cases as early as January 2020. The criminal complaint also accuses the company of not having paid settlement offers negotiated in court as early as February 2020. In individual cases, this involves up to 90,000 euros for long-serving employees.

Thousands of employees were dismissed in the course of the insolvency, many of whom have not received any severance pay to date.The total damage for those dismissed could amount to millions.

GKK is also accused of having already noted some of the agreed severance sums on the employees' pay slips, but not having made the transfer until today. The police will first summon a witness in mid-February to clarify the allegations.

On Wednesday evening, the federal government had decided to support Galeria with a loan of up to 460 million euros. The aid measure is tied to extensive conditions and legal requirements and the company pays an appropriate interest rate, a spokesperson for the Ministry of Economics announced.

Image © Raimond Spekking / CC BY-SA 4.0 (via Wikimedia Commons