Riches to rags?

A partner at the law firm overseeing the proceedings, Rolf Weidmann, told the Handelsblatt newspaper that Arcandor shareholders are likely to lose their investments because German bankruptcy law requires the concern to meet all other creditors' demands before making payments to investors. The newspaper then cited sources familiar with the company as saying it "would take a miracle" for any of the shareholders to see their money again.

That includes Schickedanz, whose shares in Karstadt-Quelle - as Arcandor was formerly known - were once valued at some three billion euros. Other stakeholders include the Sal. Oppenheim private bank, which invested hundreds of millions of euros in the company last year, as well as thousands of small investors, who together own about 51 percent of Arcandor stock.

No funds for a rescue

Arcandor is expected to enter liquidation once insolvency proceedings are officially launched on September 1. While administrators initially planned on using bankruptcy laws to allow Arcandor managers to reorganize the company, major shareholders including Schickedanz and Sal. Oppenheim refused to pump any more cash into the troubled company.

The Luxembourg-based bank has itself been struggling with the effects of the global economic downturn. Earlier this month it turned to Deutsche Bank for a 300-million-euro capital injection.

Madeleine Schickedanz, meanwhile, seemed to predict her financial downfall in an interview she held with the Bild am Sonntag newspaper last month.

"If the rescue of Arcandor fails and the banks call in their loans, I'll lose everything - houses, shares, interests in other firms. At 65 years of age I won't even be eligible for a state pension," she told the newspaper, adding that she had already cut back her expenditure on clothing and cosmetics.

"I save where I can. We're living on 500 to 600 euros a month, and shopping at discount supermarkets," she said.

Partial sale not an option

As proceedings continue, administrators have ruled out the splitting up assets belonging to Arcandor's department store unit Karstadt, effectively ruling out partial sales to competing retailers such as Metro and Sportscheck.

"We consider Karstadt a company that can survive on its own," Weidmann told Handelsblatt.

Meanwhile, the newspaper cited Thomas Fox, a retail expert involved in overhauling Karstadt ahead of a future sale, as saying the company had received important concessions from a number of landlords and suppliers.

"It now looks as though we can remove several outlets from the list of 19 store locations that needed closer inspection," he said.

sje/dpa/AP
Editor: Trinity Hartman