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Monday, July 30, 2012

German mail order company Neckermann said it will file for insolvency, after its private equity owner refused to stump up the cash for a restructuring, adding to woes in the German retail sector.

With thanks to our reader who shared the news.

Several German retailers have sought insolvency protection lately raising skeptical doubts as to whether the German economy is really doing as well as reported.  Per Reuters:


DUESSELDORF, Germany, July 18 | Wed Jul 18, 2012 11:59am EDT
The insolvency follows that of drugstore chain Schlecker, and comes as retailers from Metro to Praktiker and Puma grapple with lower consumer spending in Europe as a result of the region's debt crisis.
Neckermann had been in talks with staff representatives since announcing plans in April to shut down its catalogue business and sell only via the internet, a move which would have resulted in almost 1,400 job losses.
It said last week that it did not have the funds to pay staff the compensation they were seeking for the redundancies.
Wolfgang Thurner, a representative of trade union Verdi on the Neckermann board, said on Wednesday that Verdi and Neckermann had been able to reach a compromise but that private equity owner Sun Capital had not approved the plan.
The collapse of Neckermann, which sells products from clothes to technology, furniture and homewares, means around 2,000 jobs are at risk.
A spokeswoman for Sun Capital said it had been willing to provide 25 million euros ($30.5 million) in financing, but that the plan presented by the management would have needed 60 million euros and that it therefore decided to pull the plug on its investment.
London-listed property company Segro, which owns the Neckermann catalogue printing factory in Frankfurt that was due to be closed under the restructuring, said Neckermann had paid rent up until the end of July.
It warned however, that it was unlikely to find a new tenant for the facility in the short-term and could therefore lose out on the rent from the site from 2013.
Separately, the public prosecutor's office in Stuttgart and police in the state of Baden-Wuerttemberg said on Wednesday they had searched 22 properties, including houses belonging to Schlecker family members, as part of an investigation into fraud and delayed reporting of insolvency at Schlecker.
The Schlecker insolvency administrator said the company was cooperating and that such investigations were not out of the ordinary occurrences for collapsed firms.
The failure of the chain has wiped out the fortune of the Schleckers, once one of Germany's wealthiest families.

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