On July 2, 2020, the KSM Castings Group GmbH, one of the leading automotive suppliers for lightweight die-cast aluminum and magnesium components for chassis, gearboxes and engines, applied for a protective shield procedure. The German automotive market is particularly affected by the effects of the corona pandemic with strong falls in demand and production. In order to take these market changes into account, the company plans to restructure and reposition itself as part of the protective shield procedure. In Germany, the KSM Castings Group GmbH employs around 1,800 people at the four production sites in Hildesheim, Wuppertal, Radevormwald and Wernigerode. KSM Castings Group GmbH generated sales of EUR 360 million with its locations in Germany and the Czech Republic in 2019.
“We were recently on a clear growth course in Germany. Then Corona came. We will have to adjust to a changed market after Corona, ”said Dr. Zhihua Zhu, CEO of KSM Castings Group. “That is why we are now going to use the possibilities offered by the protective shield process to position our company in such a way that we are again competitive under the new market conditions. Our shareholder is supporting the restructuring course we have embarked on and has agreed to support it. ”
The operational business of the automotive supplier is not affected by the protective shield procedure. Component production and delivery to automobile manufacturers and OEM partners continue without restrictions.
Market slump in the German automotive market
According to the Association of the Automotive Industry (VDA), car production in Germany in the first five months of 2020 decreased by 44% compared to the same period in the previous year. According to the association, no recovery is in sight.
This slump in the market also has a direct impact on automotive suppliers such as KSM Castings based in Germany, which can only be partially offset by measures such as short-time work.
Only protective shield in Germany for KSM Castings Group GmbH
KSM Castings Group GmbH employs a total of around 2,350 people in Germany and the Czech Republic and generated sales of EUR 360 million in 2019. The protective shield procedure was only applied for for the German production sites of KSM Castings Group GmbH.
The protective shield procedure is a special form of insolvency in self-administration, in which the existing management needs a reorganization or restructuring plan worked out. It is only used if the company has a prospect of successful restructuring and is not insolvent.
Support is given by restructuring experts Lawyer Prof. Dr. Gerrit Hölzle and lawyer Dr. Thorsten Bieg, who was appointed Chief Insolvency Officer (CIO) in the management of KSM Castings Group GmbH. The restructuring and insolvency specialists come from the GÖRG law firm and have extensive experience in self-administration proceedings. Attorney-at-law Dr. Rainer Eckert was appointed by the Hildesheim District Court.
The management under the leadership of CEO Dr. Zhihua Zhu will work with the restructuring and insolvency experts over the next few weeks to develop a concrete restructuring plan. The extent to which the personnel capacities of the production sites in Germany also need to be adjusted has not yet been determined.