▪ The aim of the proceedings is to further strengthen the Group's fundamentally positive positioning in the market and to make the company in question fit for the future - self-administration is also being examined as a suitable restructuring option for other companies; foreign companies not included in the restructuring process
▪ Company draws up restructuring plan - experienced Schultze & Braun team led by restructuring expert Dr. Jürgen Erbe advises and supports management
▪ Business operations and production to be continued in full - wages and salaries of around 520 Gienanth GmbH employees to be secured via employment agency
Eisenberg (Pfalz)/Schwandorf/Kulmbach/Chemnitz. Gienanth GmbH, a core company of the Gienanth Foundry Group, filed an application for debtor-in-possession restructuring proceedings with the Kaiserslautern Local Court on November 27, 2023. This is Gienanth's response to the recent increase in financial burdens on the entire group of companies. The company is currently examining whether self-administration is also a suitable restructuring option for other companies. This review includes the companies Gienanth Group GmbH, Gienanth Sales GmbH and Gienanth Verwaltungs GmbH (all Eisenberg), Fronberg Guss GmbH (Schwandorf) and Gienanth Zaigler MBA GmbH (Kulmbach). Other Group companies in Austria and the Czech Republic are not and will not be part of the restructuring proceedings.
The aim of the proceedings at Gienanth is to make the Group fit for the future and to further strengthen its fundamentally positive positioning in the market. Business operations at the headquarters in Eisenberg are to be continued in full following the Kaiserslautern Local Court's decision on the application. "The proceedings should provide us and our business partners with the necessary security and reliability. Our customers know us as a reliable partner at their side who is committed to the highest quality. It is precisely this commitment to ourselves that we want to manifest with the restructuring process of our central operating company," says Torsten Stein, Managing Director of the Gienanth Group.
The Group's approximately 1000 employees have already been informed of the proceedings. The wages and salaries of the approximately 520 employees of Gienanth GmbH are to be covered by the employment agency up to and including the end of January 2024. Gienanth will then resume paying the employees' wages and salaries.
Diverse effects of current crises
Despite a very stable foothold in its core markets and positive business development until 2019, the Gienanth Group has suffered financial losses in recent years due to the effects of the geopolitical, economic and health crises. The Covid-19 pandemic led to production stoppages worldwide and high absenteeism rates in the workforce. As a result, supply chains were severely disrupted and the availability of important individual parts was significantly restricted. "Our customers in the automotive industry in particular had to cut back their production due to the lack of availability of semiconductors and therefore also placed fewer orders with Gienanth," reports Gienanth Managing Director Stephan Vrublovsky.
In addition, there were considerable additional burdens due to the sharp rise in prices for raw materials and energy, particularly as a result of Russia's war against Ukraine. Gienanth was able to pass these increases on to customers, but only with a certain time lag, which put additional pressure on the balance sheet. The sanctions against Russia also meant that the Kulmbach and Schwandorf production sites were no longer able to fulfill larger orders destined for the Russian market.
Major fire at the Chemnitz plant
The strategically motivated takeover of the Gienanth site in Chemnitz as part of the transformation from a pure product supplier to a system provider also led to a financial burden for the Group as a whole. "We were well on the way to organizing and integrating the structures and processes in Chemnitz to bring the plant into the black. However, the major fire in Chemnitz ruined our plans and also brought further burdens for the entire Group due to the loss of production and the loss of company assets. We therefore had to make the difficult decision not to rebuild the site," says Torsten Stein.
The restructuring process at the core operating company is intended to give Gienanth the opportunity to respond to the aforementioned challenges in a targeted manner and make the Group fit for the future. "We want to secure the company and as many of our jobs as possible in the long term," says Stephan Vrublovsky. "To this end, Gienanth will draw up a restructuring plan in the coming months and look for potential investors who are willing and able to provide our group of companies with fresh money and lead it into the future. We will start a targeted search for interested parties in the coming days."
Support from restructuring experts
The management of the Gienanth Group will be supported in the restructuring process by an experienced team from the law firm Schultze & Braun, which specializes in restructuring, led by restructuring expert Dr. Jürgen Erbe. "The planned restructuring procedure under self-administration would enable us to carry out the restructuring within a manageable period of time. Gienanth has already done a lot of the necessary preparatory work in recent months. We can and will build on this. Gienanth is well established in its markets, has positioned itself strategically in many future-oriented markets and is an essential and indispensable supplier of high-quality castings, particularly for critical infrastructure. These strengths must be further expanded. This is possible with the right investor," says Dr. Erbe.
About Gienanth: The company headquarters in Eisenberg (Palatinate) was founded in 1795 as a hammer mill. Today, the Gienanth Group is a well-established foundry group that specializes in the production and finishing of high-quality iron castings using machine and hand moulding processes. Gienanth offers its customers ready-to-install product solutions made of cast iron for the mobility and mechanical engineering industries as well as decentralized energy supply with unit weights of up to 15 tons. The most important product groups, both in large and small series, include cast parts for cars and commercial vehicles, agricultural and construction machinery and railroad technology, as well as cylinder crankcases and add-on parts for large engines and mechanical engineering components. With a total of around 1000 employees, the group of companies generates a turnover of around 300 million euros per year.
Self-administration: Restructuring under self-administration is a procedure under insolvency law that the company can carry out under its own management. In a self-administered restructuring, the management remains fully capable of acting and can act without restriction. It is supervised by a trustee appointed by the court. The aim of self-administration is to restructure the company. The management is advised and supported by a team of recognized restructuring experts. At Gienanth, this is a team from Schultze & Braun comprising the lawyers Dr. Jürgen Erbe (general representative for all companies in self-administration), Detlef Specovius, Michael Böhner, Dr. Dirk Pehl (all restructuring lawyers and also general representatives for individual group companies in self-administration) and Alexander von Saenger (restructuring employment law). In addition, the consulting firm Roland Berger with a team led by Mathias Heller and Marco Horstmann and the law firm Baker McKenzie with the lawyers Joachim Ponseck, Prof. Dr. Artur M. Swierczok and Tim Hosgör have already been supporting the group of companies for the past few weeks.