Essen, Germany - Creditors who have taken control of a chain of 54 German department stores, voted Wednesday to close down the loss-making Hertie chain, putting 2,600 people out of work. A British private-equity fund acquired Hertie four years ago, but was unable to nurse it back to profit.
"The staff are shocked," said Bernd Horn, chief labour representative at the company's head office in Essen.
At the meeting of creditors, 85 per cent voted for closure, which will probably happen in the next few weeks. The court-appointed insolvency administrator, Biner Baehr, told them his attempt to negotiate cheaper leases for the store buildings had failed.
He blamed MABV, an Anglo-Dutch real estate fund which now owns the chain and the freeholds, for the impasse. In London, MABV rejected the charge, saying Baehr had made the owners into a scapegoat.
The failure comes in the same week as Germany's two main department-store chains, Karstadt and Kaufhof, have agreed to discuss merging. Analysts say downtown department stores are a dying business, with malls and drive-in shopping centres replacing them.
