manroland Files Petition to Initiate Insolvency Proceedings

OFFENBACH, GERMANY—Nov. 25, 2012—manroland AG today filed a petition to initiate insolvency proceedings with the jurisdictional district court at Augsburg, Germany, after the negotiations with a potential investor have failed in the home stretch. At the same time, the company has filed a request for self-administration in order to finalize the ongoing restructuring efforts.

Provisional Insolvency Administrator Werner Schneider will in due course examine the situation at manroland, in order to obtain a comprehensive picture of the company’s status.

The executive board of manroland aims to rescue key units within the framework of ongoing restructuring efforts as debtor in possession. The initiated insolvency procedure affords the opportunity to step up the restructuring process and guide the company through this difficult phase.

Despite all the disappointment over the path that now has to be taken, the insolvency procedure as debtor in possession offers plenty of prospects because the company has compelling products, the necessary know-how and an excellent team. With the planned entry of a potential investor and on a basis of a financing program coordinated with the previous shareholders and banks, the company’s equity base would have been strengthened.

The decision to file for insolvency was triggered by another dramatic downturn in incoming orders, which can be noticed since mid-July and has recently accelerated. Although there is still great interest in manroland’s printing systems, customers are finding it far more difficult to obtain financing in the aftermath of the financial crisis.

At the same time, intensive competition in the face of declining orders has led to even greater pressure on prices and, therefore, to declining contribution margins. The market size is now only at 50 percent of the level before the beginning of the crisis in 2008.

After showing initial signs of recovery from the beginning of the fiscal year and well into the summer, the market took another downturn, particularly in the United States and Western Europe, and in the segment for sheetfed presses. The same goes for activities in China, although business there remains brisk. This downturn had an impact on the entire industry, the force of which was not foreseeable.

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  • theoffsetpress

    There’s more to this that meets the eye. Manroland is obviously in a pickle, but insolvency does not mean they are being liquidated to pay creditors. German laws protect workers in ways different to North America. Manroland cannot just automatically start dismissing employees and laying them off. Applying for insolvency however can give them that option. Once they prove they are going to meet their demise within the current parameters, the insolvency negotiator has leverage to let manroland get insolvency "status" and do what they could not have done previously. This in turn will give them more leverage when they negotiate with creditors. It may be a long shot, but they are certainly not closing the doors at this point.
    Manroland: Insolvency vs Bankruptcy