By  on October 20, 2009

BERLIN — The German catalogue company Quelle is being liquidated. The 82-year-old firm is part of the insolvent Arcandor Group’s Primondo mail order division.

In late June, the German government granted Quelle a loan guarantee of 50 million euros, or about $70 million, to keep the cash-strapped operation afloat and help provide a basis for its restructuring. However, failure to reach a factoring agreement for the floundering mail order operation derailed negotiations with potential investors, the group’s insolvency administrator Klaus Hubert Görg said. It also negatively impacted sales, as the ongoing debate over factoring made the catalogue’s customers insecure, he noted.

After four months of searching for a buyer for Quelle or the entire Primondo catalogue unit, which includes profitable special mail order catalogues Baby Walz and Hess Natur as well as the TV shopping channel HSE24, Görg and the committee of creditors saw no alternative but liquidation.

Up to 5,000 of Quelle’s employees in Germany will lose their jobs as of Nov. 1, and unspecified others in supporting logistics firms, such as DHL, will also be affected.

Quelle’s overseas operations are healthy, according to the insolvency administrator, and will now “promptly be sold in an independent sales process.” Separate buyers are now also being sought for the remaining Primondo businesses.

Quelle’s competitor, the Otto Group, earlier indicated interest in taking over the Baby Walz, Hess Natur, and Elégance specialty catalogues and is still considered a serious contender to do so.

Despite Quelle’s demise, the German Mail Order Association confirmed its sales prognosis for 2009 on Tuesday. A growth rate of 1.7 percent to 29.1 billion euros, or $43.37 billion at current exchange rates, is expected. Online catalogue sales will see a 15 percent increase to 15.4 billion euros, or $22.95 billion, in 2009.

The search for an investor for Arcandor’s Karstadt department store group is ongoing. “Karstadt is in a much better situation,” Görg said Tuesday, though insiders expect no major moves to be made until after the holiday season.

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