The European Union has given approval for the German state to loan insolvent retailer Arcandor €50m (£43m).
The European antitrust authorities approved the six-month financing package to shore up the business after filing for bankruptcy protection in June.
The retailer, which owns Karstadt department stores and the Primondo mail order business, will need to come up with a more long-term restructuring plan if the assistance is to last longer that six months, according to the Financial Times.
The loan will be used to restart the flow of cash advances from Arcandor’s bank, Valovis. The bank stopped providing advances when Arcandor filed for bankruptcy.
Without the loan, Arcandor may have had to close large parts of its mail order subsidiary.
The retailer at first asked for a state guarantee so it could borrow €50m, but the government rejected the request, not wishing to put taxpayers’ money at risk.
Arcandor was instead asked to apply for a state loan, which had to be approved by Europe.
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