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Vapiano, Maredo, Esprit and Kaufhof-Karstadt have one thing in common: they were all in crisis long before the crisis. The crown pandemic and the protective measures and exit restrictions introduced now were just the last straw that caused the barrel to overflow. Because no solid group becomes insolvent immediately after stores have closed for only a few days.
A catalyst for failure
“The main cause of the current insolvency was the crown crisis and associated restaurant closings,” a company spokesperson for Vapiano told SPIEGEL. In fact, the pandemic was only a catalyst for company mismanagement. Of course, one should not forget that the group was suddenly unable to generate sales due to the closure of its restaurants, while fixed costs continued to accumulate. This exceptionally fast bankruptcy could have been avoided with increased reserves or additional liquid funds.
A very similar situation has also occurred in the fashion group Esprit. To protect the group from other liquidity requirements as quickly as possible, Esprit boss Andreas Kristiansen immediately escaped a so-called protective shield procedure. “I am very sure that this is the right step for Esprit,” said the head of the company regarding this decision.
Stocks were sinking long before the crisis.
The fact that Vapiano and Esprit’s operating business had been operating very moderately long before the Corona crisis is shown, above all, by the development of the respective share prices. Shares of the restaurant chain plummeted between the IPO in June 2017 and before the start of the collapse of Corona on the German stock exchanges on February 14, 2020 from 23 to 3.61 euros, generating a decrease of around 84 percent. Esprit’s share price is very similar. Although the shares in 2007 were still above 10 euros, on February 14, 2020, before the collapse of the crown, it was only 16 cents, and therefore 94 percent less.
What can creditors expect now?
The basic idea of insolvency proceedings is primarily the satisfaction of a debtor’s creditors. This is done by using, selling or auctioning all of the debtor’s assets. In principle, all the assets of the company are subject to bankruptcy. Therefore, the assets are only insured by an insolvency administrator, exploited and distributed only later to creditors. However, it generally takes several months or years before this happens.
First, procedural costs and bulk liabilities are met
The amount of money individual creditors earn from bankruptcy assets depends on a final court-approved distribution, which is processed according to a specific distribution list. This legal distribution order stipulates that all procedural costs or court costs incurred, as well as insolvency administration fees must be paid first. At the second level of claims, the debtor’s massive liabilities are met. Such liabilities include, for example, the costs of rental and leasing relationships, as well as claims from suppliers.
The allocation is based on a fixed fee.
As soon as these massive liabilities have been serviced, the remaining dividend will serve the insolvency creditors who already had a claim against the company prior to the proceeding. If there are still enough insolvency assets available, this is distributed based on a specific fee based on the insolvency table. Senior corporate bond owners are preferable to investors with subordinated loans.
Better believer than shareholder?
As a shareholder in a company, you are an automatic co-owner of a group and, strictly speaking, even a debtor and not a creditor. Fortunately, as a shareholder, you don’t have to answer for a company’s debt. But while the shareholder of a bankrupt company suffers a total loss and has to pay off his investment almost entirely, the creditor can expect to still be awarded a certain part of the bankruptcy estate. However, since there is no fixed time period for the duration of a company’s insolvency, in contrast to a private insolvency, creditors often need an extremely long breath. For large corporate insolvency proceedings, periods of five to ten years are the rule rather than the exception.
Pierre Bonnet / editors finanzen.net
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