Industry – Restructuring & refinancing

Budgeted sales targets significantly deviated from plan (~50%), which led to a significant liquidity gap that could not be closed with simple savings / restructuring. Various strategic scenarios were developed together with the management and selected investor representatives. With the exception of the protective shield procedure, all strategic scenarios had in common that further funding would be required from investors. Approaching existing shareholders showed no real willingness without new investors to provide interim funding to close the gap. Approaching new investors was unsuccessful, partly because the captable setup & structure did not allow for an attractive valuation due to debt obligations. Based on the negative going concern forecast and the inability to raise funds at this point, a protective shield procedure (insolvency in self-administration) was initiated in court for the company in Germany.

In parallel, a comprehensive restructuring programme was launched to reduce the main cost items. This included reducing the workforce by >60%, contacting all suppliers regarding outstanding supplier payables, temporarily halting production to reduce overcapacity and renegotiating key costs such as rent, machine purchases and outstanding material deliveries. The protective shield procedure was accompanied by a stringent communication strategy to all suppliers and selectively to customers (where necessary). During the process, business operations continued and options for continuation (funding) were explored. As part of the protective shield procedure and the associated restructuring, the cash burn rate was significantly reduced and funding was finally secured with a new business plan.