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Business

Bankruptcy Threat Hits Karstadt Shares

Labor representatives of German retailer KarstadtQuelle AG told Reuters news agency that the company may go bankrupt if workers don't compromise on an overhaul plan within four weeks. Shares of KarstadtQuelle initially plunged as much as 10 percent on the news. Wolfgang Pokriefke, a KarstadtQuelle supervisory board member and head of the works council for the department stores, told the newswire that "insolvency is certainly an issue." He said that "if we don't find a compromise, it could happen." KarstadtQuelle, based in Essen, Germany, last week introduced a plan that involves slashing personnel costs and selling off 77 department stores and nonretail businesses. The Verdi services union has rejected the plan, estimating that more than 22,000 jobs could disappear or be affected. "The workers have to compromise," said Christian Schindler, an analyst at Landesbank Rhineland-Pfalz. "The longer Karstadt waits, the more difficult the position of the company becomes." Chief Executive Christoph Achenbach, speaking this weekend in an interview with Focus magazine, said a lack of financing "would be the end" of the German retailer. Der Spiegel, a German weekly magazine, cited unidentified members of KarstadtQuelle's board that insolvency would be unavoidable should Verdi members decide to strike.