The insolvent German Pellets collected approximately 280 million € of capital through the issue of bonds and the approximately 17,000 investors have very few chances to recover their money.
Bettina Schmudde, the insolvency administrator, reported at a recently held creditor’s meeting in Schwerin that the proceeds from the insolvency mass largely go to creditors with secured rights, mostly banks which have secured loans with land register entries, as reported by The Business ConBio.
He added that German Pellets might have been insolvent since the middle of 2015, but there is still a satisfactory balance sheet confirmed by Creditreform in November 2015. Yet, the company was warned of liquidity problems in the repayment of the 2011/16 bond of € 52 million due on April 1, 2016.
Eventually, German Pellets has filed for insolvency on the 10th of February at the regional court of Amtsgericht Schwerin, Germany.
One of the reasons for which the Wismar’s wood pellet producer got to this situation is the decline of oil costs, which brought the wood pellets price tag way below pressure. In addition, the incomes have lowered due to the weather conditions (the last two years’ warm winters) and the acquisition of Kago, the furnace producer, in 2010, which turned out to be a bad investment.
External investment was Bettina Schmudde’s idea, because the internal sales were at a very low level since the production ceased in the second half of 2015, creating a reduction of the stocks. The price of pellets has been under pressure because the oil price crashed and two warm winters also caused the demand to decrease.
In March, there were 130 companies interested in buying the insolvent German Pellets GmbH. The insolvency proceedings for the company started on the 1st of May in Hamburg, with insolvency administrator Bettina Schmudde ahead of the issue. The bankrupt company was divided to small investors as to guarantee its continuation.
