MIFA Applied for Insolvency in Self-Administration
SANGERHAUSEN, Germany – Yesterday-morning, the Mitteldeutsche Fahrradwerke AG (MIFA) announced the loss of half of its registered share capital. In the afternoon MIFA declared that it had applied for insolvency in ‘self-administration’.
Insolvency in ‘self-administration’ is a special German legal form that allows the management of a company to handle its own insolvency, after it obtained approval from the Court to do so. Self-administration includes a suspension of payments.
Yesterday also the MIFA workforce was informed about the insolvency situation. The wages of the staff of around 600 people are guaranteed for three months through the Federal Employment Agency, (Bundesagentur für Arbeit).
Operative business remains unaffected
MIFA received approval: “To open insolvency proceedings in self-administration pursuant to Section 270a of the ‘Insolvenzordnung’ (insolvency code) InsO with the relevant district court of Halle (Saale).” It enables the management of the company to continue the restructuring process of MIFA. During this process: “The operative business of MIFA remains unaffected and will continue as planned,” is stated in a press release.
No solution with Hero
The insolvency is caused by the fact that MIFA: “Was not able to achieve an ultimate solution in one part of the agreement with Indian Hero despite intensive negotiations with those responsible.”
An essential element of the basic agreement, which was concluded on 22 August with OPM Global B.V., a subsidiary of the Indian bicycle manufacturer Hero Cycles Ltd., to financially restructure MIFA could not be implemented despite covenants given.
In view of this, the MIFA management board decided: “To apply for insolvency proceedings in self-administration to continue the restructuring process of MIFA on its own and ensure trouble-free continuation of operative business.”
‘Order book well filled’
Provided that the district court consents to the application for self-administration, the MIFA management board will be provided with a preliminary custodian. “Business responsibility remains in the hands of the management board and the present sole managing director, Dr. Stefan Weniger.” As communicated earlier Thomas Mayer will join Weniger. Mayer will be responsible for the operative business. As for the MIFA operation, the press release states: “We are basically in a position to execute the orders in our books, which are well filled.”
‘Initiating sales process’
The MIFA press release underlines further that: “The management board will continue the business operations to the full extent and will initiate a sales process without delay. The management board together with the creditors and the works council will agree on a restructuring plan in the next few weeks; in particular the plan will contain the necessary restructuring steps and form the basis of restructuring MIFA.”