Problems mount at German mail-order group Quelle

Jul 3, 2009, 11:52 GMT

   Fuerth, Germany - The problems at Quelle, keystone in a European mail-order empire that operates in 28 nations, mounted Friday with two printing firms refusing to keep printing its coloured catalogue.

The German government lent Quelle, based in the southern town of Fuerth, 50 million euros (70 million dollars) this week to keep the business operating.

The two printing works, Schlott Group and Prinovis, confirmed they had halted production of the 9 million catalogues currently being distributed for fear they would not be paid.

Customers choose Quelle goods from the catalogue or online.

A Quelle spokesman, Manfred Gawlas, confirmed Quelle was still not able to pay its bills, but said it hoped to have sufficient cash by the middle of next week.

   Quelle and its parent Arcandor declared insolvency on June 9, causing its assets to be locked.

'As soon as we have access to our accounts again, we will begin paying the most urgent bills,' he said.

A survey meanwhile implied that Germans do not support state aid to Quelle. Conducted for ZDF television, it showed 64 per cent of the public disapproved of the loan and only 31 per cent considered it the right move.

Though Quelle's troubles pre-date the recession, its insolvency is widely perceived as emblematic of the downturn. An insolvency administrator, Klaus Hubert Goerg, is expected to seek a new owner or investor for Quelle.

   Until the 1989 fall of Communism, Quelle's 1,000-page mail-order catalogues were the bible of clothes and home appliances for East Europeans behind the Iron Curtain.

Most German households own a few low-priced Quelle products, but the company's appeal has faded.