Retail partners of troubled kitchen giant Alno have been warned to assess the full impact of the company’s slide into administration or risk serious damage to their businesses.
The German kitchen giant filed for insolvency last month, confirming an ‘application for reorganisation with self administration’ had been made for Alno AG, Wellmann GmbH and Logistik & Service GmbH.
The company has been quick to claim that none of its subsidiaries in Germany or abroad are affected by the application and that its board of directors are aiming to ‘continue the reorganisation measures initiated at the beginning of the year and secure the turnaround’.
However, explaining the proceedings exclusively to kbbreview, Dr Michael Frühmorgen, a partner at Heussen law firm in Germany, said the move would be likely to impact on the supply chain.
“All customers, suppliers and any other business partners of Alno should carefully check which legal effects the insolvency of Alno AG and some of its subsidiaries will have on their business,” he said. “Even if business operations continue, everybody should be aware of the specific situation in having a business relationship with Alno. Otherwise they might lose money or endanger their supply chain.”
Dr Frühmorgen confirmed that preliminary proceedings had been opened in a German court over the assets of Alno AG in the form of a self-administration. “Any executional actions into Alno’s assets were prohibited by the court with immediate effect,” he explained. “Alno’s management stays in charge during the self-administration until a final decision about its application has been made by the court. However, the management will be controlled by a supervisor appointed by the court.
“The main goal in such proceedings is to restructure and preserve the company,” he continued. “Nevertheless, you can’t continue to run the business in the same way that you did before. Of course, the suppliers have a changed situation because they are suppliers for an insolvent company and they have to think about how they deliver in the future.
“There are different types of proceedings. The self-administration is still not the standard one in Germany but is becoming more and more popular. In some cases this proceeding is being completed by a restructuring plan. It is only allowed if the court is sure that this kind of proceeding won’t lead to any disadvantages for the creditors, since there is no insolvency administrator as a neutral person who takes over from the management that may have actually caused the insolvency.”
However, Dr Frühmorgen did indicate that after up to three months from the filing, the German court would step in and make a final decision on whether the self-administration is retained or an insolvency administrator is appointed.
“It is important to note that this is in the very early stage of proceedings,” he explained. “So we will have to wait and see how things develop but should in any case be prepared in this new insolvency situation.”
In the meantime, staff wages in Germany are paid by the state for a period of up to three months.