European restructuring proceedings have been opened in Austria over the assets of the Pierer Mobility Group, the parent company of KTM AG. The aim is to avert bankruptcy.
The first European restructuring process in Austria was opened over the assets of Pierer Mobility Group AG, based in Wels in Upper Austria. This was communicated on Tuesday by the Credit Protection Association (KSV) from 1870. A European restructuring procedure is a special procedure. The point is that companies that are at risk of insolvency but are not yet insolvent have the opportunity to recover economically through legal restructuring proceedings before they have to file for bankruptcy.
The procedure within the meaning of the Restructuring Regulations (ReO) came into force on July 17, 2021. The further procedure is as follows: Bond and promissory note creditors are requested to register their claims at the Wels Regional Court by January 31, 2025 at the latest and to send the debtor a copy of their claim registration.
The Pierer Group must submit a restructuring plan for KTM AG by December 27, 2024. The restructuring officer is the Linz lawyer Dr. Thomas Zeitler has been appointed, his deputy is his colleague Dr. Norbert Mooseder, also from Linz.
The procedure can only be used if insolvency is imminent or is likely to occur soon. To prepare for the procedure, the entrepreneur must develop a restructuring concept. In it he must credibly describe how he wants to ensure the future existence of the company and what measures he is planning to achieve this.
The plan requires the consent of the creditors involved by the debtor. The entrepreneur decides what these are. As a rule, he will approach those who are crucial to the continued existence or implementation of the restructuring plan. The claims of creditors not involved remain unaffected by the proceedings and must be paid in full. This also includes employee demands. There is no provision for the court to notify the preferential creditor protection associations. But the debtor or a creditor can actively bring an association into the process.
The European restructuring process will be made public by the courts. Creditors also have to register their outstanding claims with the court at the request of the debtor company in this procedure, as in insolvency proceedings. The European restructuring procedure meets the requirements of the EU Insolvency Regulation and is particularly recommended for those companies that have assets in other EU countries, as it is also recognized there.
According to the KSV, as a further consequence, KTM AG, a subsidiary of Pierer Mobility, is facing bankruptcy. An application for restructuring proceedings with self-administration should be submitted. According to Pierer Mobility, KTM AG’s financing needs amount to a high three-digit million amount. At the same time, the subsidiaries KTM Components GmbH and KTM F&E GmbH are also said to be affected. The aim is to sustainably secure the existence of the KTM Group.
Negotiations with major shareholders, banks and possible investors have been underway for months to plug the financial hole. While net debt was still 300 million euros in 2022, it has shot up to 1.5 billion euros this year. The Pierer Mobility share temporarily fell to under 8 euros on November 26th; a year ago it was still over 60 euros.
