Following the earlier announcement relating to Neschen AG filing or self-administered insolvency, ArtSystems - the UK distributor for Neschen materials - has offered assurances to UK users of Neschen products.
“Having spoken with Senior Management at Neschen AG we are confident that their announcement of self-administered insolvency will not affect ongoing supply of Neschen product here in the UK. We understand this is a necessary step to allow them to complete their restructuring and expect Neschen AG to emerge a stronger company at the end of the process.
"We are still placing orders and receiving stock from Neschen AG as normal and have been experiencing strong sales growth year on year for the past 18 months which we expect to continue,” says Steve Hawker, managing director of ArtSystems.
The previously released Neschen statement in full:
The managing board of Neschen AG (ISIN: DE0005021307) filed for the opening of self-administered insolvency proceedings with the responsible local court in Bückeburg today in order to be able to continue the restructuring process autonomously. This does not affect the operative business of Neschen AG. The European distribution companies are not affected by the insolvency. Bückeburg Local Court – Insolvency Court – granted the application today and permitted self-administered preliminary insolvency proceedings to facilitate the restructuring of the company. Mr Arndt Geiwitz of Schneider Geiwitz & Partner was appointed provisional trustee of creditors. Managerial responsibility remains in the hands of the managing board, which co-opted Dr. Bettina E. Breitenbücher as an insolvency specialist in addition to the CEO, Henrik Felbier. She will assist the restructuring process in insolvency as a CRO. Michael Aupke had offered the supervisory board his retirement from office earlier. The supervisory board accepted such retirement with immediate effect and explicitly thanked Mr Aupke for the work done. “As we have already managed to increase our earnings we now want to use the insolvency to reduce the company’s debt. We want the company to emerge from the insolvency stronger”, the CEO, Henrik Felbier, emphasizes. During the next weeks the managing board will work together with the creditors and the works council to draw up a reorganization plan, which will include the necessary restructuring steps and form the basis for restructuring.
Creditor was not willing to reach an agreement
Neschen AG has not received a positive forecast for its continued existence, nor are there indications that the negotiations with its creditors will be completed successfully. Therefore the company must file for insolvency proceedings because of over-indebtedness. Despite extensive negotiations with the principal creditor the refinancing of € 24.3 million (plus € 20 million debtor warrant bond) failed. The intention is now to use the insolvency proceedings to reduce the company’s indebtedness. CEO Henrik Felbier: “Although the operative restructuring of the company was completed successfully, we would not have been able to service the loans properly from our earnings. To our regret, Sandton was not prepared to make a positive contribution to refinancing. In addition, the shareholdes had opted against the replacement of loan capital by equity capital earlier, so we were left with no choice but to file for insolvency. The only possible conclusion is that Sandton was not interested in a sustainable solution for Neschen without insolvency from the beginning.
Bückeburg Regional Court confirms doubts in respect of acquisition of loan by Sandton
The situation was aggravated by the fact that it is currently unclear who rightfully owns Neschen’s loans – J.P. Morgan or Sandton. The company established by Sandton in Luxemburg for the acquisition of the loan obviously lacks the permissions required under supervisory law for banking and other financial transactions. The performance of such transactions is even explicitly ruled out in the company’s articles of association. In light of this knowledge, Neschen filed a suit with Bückeburg Regional Court (Landgericht) last week. The regional court is expected to declare that Sandton Financing III (Luxemburg) S.à r.l. - "Sandton III" – has not become the creditor of the € 24.3 million loan plus collateral. In a temporary injunction, Bückeburg Regional Court has expressed substantial doubts over the rightful ownership of Sandton in Neschen’s loans. In the event that J.P. Morgan still owns the loan, Neschen had also requested J.P. Morgan to cooperate in refinancing. Until now, however, J.P. Morgan has not responded to the company’s request.