Restructuring in the automotive industry – case study

Companies are advised to install a crisis early warning system and a resilient plan for the future now. In a crisis, the following strategic options are available:

• Strategic Financing,
• Partnerships/Joint Ventures,
• Transformation/Restructuring,
• M&A/Consolidation (total or partial sale) and
• Liquidation/Insolvency.

Restructuring cases in the automotive industry are typically complex international. This also applies to this typical case: A German automotive supplier slipped into crisis and filed for insolvency. Apparently because insolvencies are rare in China due to state-owned operations and financing, the Chinese shareholder and landlord was surprised by the harshness of German insolvency law. However, for the company and the other stakeholders such as the employees, customers and suppliers, the insolvency proceedings turned out to be a great opportunity. The company's assets were taken over in an asset deal. The purchase price was used to satisfy the creditors. Furthermore, the buyer did not have to assume any liabilities. The Chinese landlord concluded a lease agreement with the buyer. The financing was completely restructured. The purchase price was kept very low through a machine lease. The insolvency finally solved the crisis in a legally secure and successful manner. The company now continues to operate with fresh money and an investor. During the entire process, the supply chain was secured.

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Photo: OrthsMedien - stock.adobe.com