Hanging in the balance

For Quelle, there are still hopes that disaster can be avoided. The head of the company, Konrad Hilbers, on Monday morning urged the government in Berlin to decide in favor of the mail-order house and to grant a government loan that would bail the company at least out of its most urgent troubles.

"There still is a way to avoid bankruptcy," he said. "We need to those discussions and urgently should get some positive results from Berlin."

Last Wednesday, a committee of federal and state finance ministers considered extending Quelle up to 50 million euros ($70 million) worth of loans.

The decision on whether or not the loan will be granted is expected to come Monday evening after yet another meeting of the inter-ministerial committee.

So far, Chancellor Angela Merkel had been rather reluctant to rush to the rescue of Quelle, defended her government's reticence by pointing to the European Union's competition rules.

"We have to let the EU in on the whole process," she said, adding that nobody would benefit if the EU ruled against any state-loans after they had already been made.

But the Bavarian CSU – sister party to Merkel’s conservative CDU – over the weekend stepped up the pressure on Berlin to rule in favor of Quelle. State Premier Horst Seehofer, raised the stakes on Sunday, June 28, accusing his fellow conservatives in the federal government of putting thousands of jobs at risk.

"Jobs are at acute risk, nobody can want this," Seehofer said.

What should be done?

The conservative politician demanded that Berlin agree to contribute to a package of loans to save Quelle, after it emerged on Saturday that the company was unable to pay its suppliers and was teetering on the edge of collapse.

Bavaria, where most of Quelle's 8,000 employees are located, led the charge, pledging 21 million euros in aid. The state of Saxony offeredan additional 4 million euros.

But the federal government later said that it wanted Quelle to improve its application for assistance and that it would wait until the EU's competition watchdog in Brussels had reviewed the situation before contributing funds.

Death of a sales concept

Quelle is a highly symbolic German company, especially among the older generation, and has a mail-order catalogue featuring everything from washing machines to underwear.

Together with the department store chain Karstadt, it is one of the most prominent casualties of the bankruptcy of its parent company Arcandor.

Yet not everyone wants to see it bailed out.

Henning Koopmann, the boss of Quelle's competitor Neckermann, said any state rescue for his rival would be "unfair."

"A state-backed loan might save 8,000 jobs at Quelle for now, but it would also endanger the 72,000 jobs at other mail-order companies in Germany," he said.

Bavaria's opposition Social Democrats also criticized the regional government, accusing it of conducting a cynical drama on the backs of Quelle employees.

On Saturday, the daily Sueddeutsche Zeitung reported that Quelle transferred all of its cash to its parent Arcandor, only hours before that company declared insolvency on June 9.

An Arcandor spokesperson later confirmed the report, but said the transfers were automated and not motivated by the insolvency.

Since then, Quelle has been surviving off the kindness of its suppliers, who have suspended their invoices.

nw/dpa/AFP

Editor: Toma Tasovac