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Hero Rejects Accusations on Espionage at MIFA

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SANGERHAUSEN, Germany – The administrator installed by the district court of Halle (Saale) for the Mitteldeutsche Fahrradwerke AG (MIFA) insolvency announced to investigate the possibility of submitting compensation claims against Indian bicycle producer Hero Cycles. The court will also look into possible claims against former MIFA managers.

Hero Rejects Accusations on Espionage at MIFA
MIFA shareholders are demanding an expert investigation into possible corporate espionage by Hero Cycles. – Photo Jo Beckendorff

Administrator Prof. Dr. Lucas F. Flöther of Flöther & Wissing will investigate if claims can be put forward against Hero Cycles. The administrator suspects Hero – instead of saving and stepping into struggling MIFA – of corporate espionage of in particular production know-how at the Sangerhausen-based company.

Expert investigation

According to German business newspaper ‘Handelsblatt’ several MIFA shareholders are demanding an expert investigation into possible corporate espionage by Hero Cycles. They believe that Hero was never seriously interested in saving MIFA and investing € 15 million into the struggling German bicycle producer which the Indian bike maker communicated  through its subsidiary OPM Global last May. By pretending a serious interest the Indians were able to survey the MIFA production site.

Hero reaction

German press agengy dpa published a reaction by Hero Cycles CFO Rohit Maheshwari. He rejects all accusations with: “The accusations will not hold before any court.” Maheshwari even blames MIFA that specific contractual conditions for the Hero participation have not been properly fulfilled. Moreover MIFA didn’t inform Hero clearly about its financial situation. According to Maheshwari the financial figures of the last four years presented to Hero haven’t been correct. That could also be a reason for why the ensured financial injection of € 15 million didn’t arrive in Sangerhausen.

Claims against former MIFA managers

Moreover administrator Flöther is also looking into possible claims against former MIFA managers. With this statement he might be targeting former CEO Peter Wicht. After a € 15 million net loss for fiscal year 2013 being announced in the first quarter of 2014 Wicht left the company prematurely for health reasons.

Interested parties for MIFA-takeover

Despite these accusations law firm Flöther & Wissing says that two interested parties for a possible MIFA-takeover were found already. According to several local newspaper report government officials of the state of Saxony-Anhalt (the German state MIFA is located in) – met already one of the interested parties. At the time of writing no further details are reported.

Nevertheless current MIFA chairman and ‘trouble-shooter’ Dr. Stefan Weniger is confident that the upcoming sale of the company will fetch a good price as: “MIFA is a high potential company.”

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