Arcandor, the family-owned retail business, has today filed for insolvency after being refused state economic aid. The company stated "threatening liquidity" as the reason after their plea for €650 million was rejected by the German chancellor Angela Merkel.
Merkel was unhappy with the amount offered by the company's owner, Madeline Schickedanz, and shareholding bank Sal Oppenheim Jr & Cie. "The commitments by the owners and the creditors were absolutely not enough for us to step in," Merkel told reporters in Berlin. "So this is now an unavoidable step, but one whose opportunities should be put to good use."
The move to insolvency threatens 43,000 German jobs and could see the different branches of Arcandor split. Two of its biggest assets are the Karstadt department stores in Germany and the controlling stake it owns in the Thomas Cook Group.
The company has been trading since 1881 and the Schickedanz family has been the controlling shareholder in the retail side of the company since the post-war era. However, their fortune has been slowly eroded by a series of unsuccessful attempts to turn the business around in recent years.
Arcandor's share price plummeted today as much as 39%, falling to a 17-year low. The latest available figures, from 2008, show the group had revenues of €19.4 billion.