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Covid-19 fallout: Outrage breaks out in Germany as Adidas, H&M stop paying rents

Several policymakers have spoken against big corporations who are hiding behind the letter of the law to cut costs.

, ET Bureau|
Last Updated: Mar 30, 2020, 06.25 PM IST
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Adidas clarified that it was only freezing rent payments for April, and that it would be paid at a later date.
Adidas clarified that it was only freezing rent payments for April, and that it would be paid at a later date.
Days after Thomas Schaefer, finance minister of Germany's Hesse state killed himself over the economic crisis spawned by the coronavirus pandemic, his fellow politicians have trained their guns on sportswear giant Adidas, after the group decided to hold back rent payments on its shops by availing a government emergency law that gives tenants temporary relief.

“It is irritating when big companies simply announce a halt to rental payments. Now is the time for co-operation . . . We will only get through this crisis together if we show consideration and cohesion. Corona teaches us that we will fail if we show egoism,” German finance minister Olaf Scholz told Bild newspaper.

Several policymakers have spoken against big corporations who are hiding behind the letter of the law to cut costs, even as the government announced a $808 billion bailout package – roughly 10 percent of the country’s GDP. Katarina Barley, a Social Democrat politician, who is currently the vice-president of the European Parliament took to social media to express her scorn.

She posted on the microblogging website Twitter, a photo of herself wearing a pair of Adidas sneakers with the caption: “Those are the last Adidas that we bought. For a global group with 3.2bn profits in 2019 to exploit protection clauses for tenants with existential problems is shabby.”

Adidas, however, clarified that it was only freezing rent payments for April, and that it would be paid at a later date. “Adidas, like many other companies, has temporarily suspended rental payments where our shops are closed,” a spokeswoman for the sportswear company said.

"It is important to note: this is not about not paying the rent for April. This is only about a deferral...Our landlords, who are mostly large property companies and insurance funds, have mostly shown understanding for this measure. Private landlords are exempted from the deferral, and have received the April rent as usual," she added.

Other retailers made similar announcements. Kik and H&M will also defer rent payments on showroom, as will Europe’s biggest shoe retailer, Deichmann. These moves have been rendered legal by an emergency tenancy law passed in the German parliament last week that seeks to minimize the economic burden of Covid-19 on citizens and small businesses.

The new law effectively bans the eviction of tenants for the non-payment of rent for the months of April, May and June. Tenants are granted time till June 30,2022 to repay dues. The legislation does not exclude large corporations, but government officials have indicated that it was not meant for multinational companies with stable financials.

“It is indecent and unacceptable for financially strong companies to stop paying their rents . . . Tenants must obviously pay their rents. The relief offered by the legal change was intended only for tenants that were suffering “serious difficulty to make payments as a result of the crisis”, said Christine Lambrecht, Germany’s justice minister.

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Football Frenzy

8 Aug, 2019
Liverpool, who missed out on the league title by a single point last season, will take to the field on Friday, in what will be the first match of the 2019/20 season of the English Premier League. As is customary in football leagues the world over, English clubs will sport a new set of kits for the forthcoming season. Here is how players from the top teams will look, come the weekend. (Clockwise from top left: Liverpool, Tottenham Hotspur, Manchester United, Chelsea)
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