German retail and tourism giant Arcandor has filed for bankruptcy with the likely loss of around 43,000 jobs in Germany. The move came after the German government dismissed its request for emergency state aid.
Travel agency Thomas Cook, in which Arcandor holds a 52% stake, 'will remain unaffected by the insolvency proceedings,' a statement said.
The group, which employs 70,000 people in Europe, two-thirds of whom work in Germany, said its department store chain Karstadt, as well as mail-order company Quelle, would also be affected by the insolvency.
On Monday, the government rejected the company's request for €650m in state loan guarantees and €437m in emergency loans but gave the firm one last chance to submit an improved bid. But following an emergency meeting, the firm's board said it could no longer raise funds after the government rejected its plea for help.
'Given the fact that loans in the amount of €710m will shortly become due, the company will be threatened with insolvency as of June 12 2009,' the statement said.
The German government's decision not to intervene to save the firm followed its efforts two weeks ago to keep car maker Opel and its 25,000 workers afloat with billions of euro in aid. Chancellor Angela Merkel has insisted, however, that Opel represented a 'special case' and that Arcandor was in trouble already before the recession.
