In an interview with Bild am Sonntag, Merkel accused Arcandor of “huge mismanagement.”
“I can’t understand at all why some in the Social Democratic Party want to burden German taxpayers with a risk instead of tackling the causes,” the chancellor said.
Her comments come a day after reports that Arcandor had admitted it stopped rent payments during an emergency meeting in the Economy Ministry in Berlin with representatives from creditor banks, shareholders and property owners.
The retailer’s struggle has divided German lawmakers on whether to help another national corporate icon after bailing out General Motors’ German unit Opel last month.
German Foreign Minister and Vice-Chancellor Frank-Walter Steinmeier of the Social Democratic Party said on Friday “an Arcandor insolvency would be the worst solution.”
Arcandor has applied for €650 million ($930 million) in loan guarantees and a credit line of €200 million from Berlin out of a government fund to help companies hit by Germany’s worst postwar slump.
The company owns a 52-percent stake in Europe’s second biggest tourism group Thomas Cook, the Karstadt chain of department stores and iconic shops such as the KaDeWe in what used to be the commercial heart of West Berlin. The money-losing Karstadt chain, founded in the 19th century, employs about 25,000 people.