Schlecker liquidated as creditors reject rescue | Business| Economy and finance news from a German perspective | DW | 01.06.2012
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Schlecker liquidated as creditors reject rescue

The creditors of insolvent German Schlecker Group have decided to sell all remaining assets of the company, after rejecting takeover bids for the drugstore chain. More than 13,000 workers will lose their jobs.

In the opinions of its creditors, there was "no prospect of finding an economically viable basis to continue Schlecker's operations, or of selling it to an investor," the drugstore chain's insolvency administrator, Arndt Geiwitz, announced Friday.

After meeting Schlecker's main creditors in Berlin, Geiwitz said that Schlecker assets would now be sold off as soon as possible, including Schlecker's logistics centers and its properties.

The two subsidiaries, IhrPlatz and Schlecker XL, which employ 3,990 and 1,100 people respectively, will not be affected by the break-up plans, he added

Deploring the creditors' decision, Geiwitz said that he felt "especially sorry" for the roughly 13,200 remaining Schlecker workers, most of whom had been employed by the chain for "many years" and who would receive letters of dismissal "until the end of June."

The liquidation comes after last minute bids to buy the group had raised hopes within the company, which once employed more than 30,000 workers in about 7,500 stores in Germany and abroad.

However, none of the offers were acceptable because "they were well below the values that can be obtained by a break-up of the company," Geiwitz said

Rescue drama

On Friday last week, reportedly three potential investors showed an interest in buying Schlecker and were given a week's time to adjust their offers conceptionally as well as financially.

Among those interested was US-German billionaire investor Nicolas Berggruen, who saved insolvent German department store chain Karstadt in 2008 and who was said to have offered between 100 million ($123 million) and 150 million euros.

Earlier this year, the German government already rejected a bailout plan for Schlecker, after the pro-business Free Democratic Party - junior partner in the conservative-led government - had raised objections.

In addition, insolvency administrator Arndt Geiwitz tried to turn the company around, slashing the workforce by 16,500 and the number of stores by 4,500 since it filed for protection from its creditors in January this year.

Schlecker creditors are said to have outstanding claims "close to" one billion euros, and include debt to the tune of 300 million euros owed to Euler Hermes credit insurance group, as well as 150 million euros in unpaid social insurance owed to the German labor agency.

uhe/gb (dpa, AFP, Reuters)