HALL (dpa-AFX) – The state is currently offering many guarantees, cheap loans and assistance so that as many companies as possible survive the corona crisis. From the perspective of the Air Berlin insolvency administrator and restructuring expert Lucas Flöther, this is not the best solution for all companies. The basic problem is often only postponed to the future, said the lawyer of the German Press Agency.
“In the long term, the crisis tears a deep hole in the finances of these companies,” said Flöther. “This will turn these companies into classic reorganization candidates who should think about protective shield procedures and other real restructuring tools.”
A protective umbrella is the mildest form of restructuring in insolvency law, where the executive board continues to run the business. Because management retains a lot of influence, the law only allows the protective shield at the beginning of an economic imbalance.
“If they take advantage of the loan programs now and leave their last assets to the banks and then realize in six months that they are stuck, it will usually be too late for a protective shield procedure,” warned Flöther. The advantage of the instrument is that companies can get rid of some particularly pressing costs and liabilities. “Even long-term obligations and leases can be terminated, and a haircut is also possible.”
This could also reduce costs in the crisis with many loss of revenue. The prerequisite is that the entrepreneurs have experienced consultants at their side. “Because a protective shield procedure gives entrepreneurs the tools that otherwise only have insolvency administrators for a good reason; from the perspective of creditors, these are often torture tools.”
Most recently, the department store chain has Galeria Karstadt Kaufhof used the possibility of the protective shield procedure. The Esprit fashion group also took the step for several daughters. The airline Condor also used this option after the bankruptcy of its mother, the British travel operator Thomas Cook.
At Condor, Flöther, as the administrator, monitors that the interests of the creditors are protected. From the perspective of the creditors, the process does not appear to have so many advantages at first glance, Flöther admitted. Banks, landlords and lessors would have to fear that long-term contracts would be canceled or new terms negotiated. “On the other hand, I experience that insolvency plans after self-managed reorganizations often get 100 percent approval from the creditors, even though each of them has to forego a lot of money.” The reason for this is that it is better for creditors if a contractual partner exists further than disappearing completely from the market.
From Flöther’s point of view, medium-sized companies should also think about a protective shield procedure. Because of the necessary intensive advice, it is not suitable for very small businesses such as kebab shops. “But already for the car dealer with two or three car dealerships.”
Due to the global corona pandemic, experts worldwide and in Germany are anticipating serious and lasting negative consequences for economic performance. The International Monetary Fund recently warned that it was expecting the worst development since the Great Depression in the 1920s and 30s. The federal and state governments are currently trying to cushion the negative corona consequences in Germany with multi-billion dollar subsidy, credit and guarantee programs, as well as tax relief and access to basic security./hnl/DP/fba
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