The coronavirus pandemic has eroded business for hairdressers across Germany. Now, the Klier Hair Group says it will need to close shops and lay off workers if it is to survive.
The Klier Hair Group, Germany’s largest hair salon chain, has officially filed for bankruptcy protection, hoping an insolvency proceeding can salvage most of its existing business. A court in Wolfsburg on Tuesday agreed to open insolvency proceedings, following an application from the beleaguered company in September.
Klier, a family company started in 1948, owns brands such as Essanelle and SuperCut, and operates some 1,300 hair salons employing roughly 8,500 people across the country.
“Beyond a restructuring that will allow our company to continue operating in the future, our top priority is maintaining as many of our shops and salons — and the jobs that are connected to each — as possible,” the company said in a statement on Tuesday.
Michael Melzer, who took over as CEO in September, thinks the company is on a good restructuring trajectory but says, “Unfortunately, we’ll have to cut ties with salons and shops that have failed to operate at a profit.” Melzer says that is the only way the company can survive while at the same time saving most jobs.
Melzer said it was not yet clear how many shops would have to close since negotiations with landlords were ongoing.
Klier, which generated roughly €300 million ($361 million) in revenue in 2019, has been under pressure due to flagging business as a result of the coronavirus and expects to deliver a comprehensive restructuring plan by late December. The coronavirus pandemic has hit the branch especially hard and Klier has been in severe difficulties ever since the first lockdown this spring.
A court in the city of Wolfsburg, where the company is headquartered, has now begun reviewing creditor claims. Creditors will decide whether or not to accept the Klier Group’s restructuring plan at a special meeting on February 25, 2021.