German Retailer’s Leadership Is Investigated Over Insolvency Filing

German prosecutors are probing whether the leadership of Galeria Karstadt Kaufhof GmbH, Germany’s leading department store chain, took too long to file for insolvency as it struggled to survive the pandemic.

Prosecutors in Essen started the probe in December after receiving a complaint from a private person, a spokeswoman for the office said. She said the investigation is in its early stages and the suspects have yet to be notified. She declined to identify them or disclose how many people are being probed.

Galeria Karstadt Kaufhof didn’t immediately comment on the probe when contacted Thursday. The investigation was earlier reported by Sueddeutsche Zeitung.

Galeria Karstadt Kaufhof, controlled by billionaire Rene Benko, filed for insolvency in April, seeking to use a mechanism to turn around its business while being shielded from creditors. That led to a restructuring which saw the company cut liabilities, close 41 stores and cut 2,500 jobs, according to the Verdi trade union. Benko also injected fresh equity as part of the plan.

The company this week secured a government-aid package of 460 million-euro ($558 million) loan to weather the fallout from the coronavirus crisis, officials familiar with the matter have said.

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