After Meyer Werft, another German shipbuilder is facing a crisis of bankruptcy and has initiated insolvency proceedings.
The courts of the German cities of Flensburg and Neumünster have commenced insolvency proceedings against four companies of the German shipbuilding group Flensburger Schiffbau-Gesellschaft (FSG)-Nobiskrug, which consists of FSG Shipyards in Flensburg, Nobiskrug Yachts Shipyard in Lenzburg, and FSG-Nobiskrug Design, with a history of 100 years, and its parent company. All three companies, as well as the parent company, are currently subject to insolvency proceedings.
According to German media reports, financial instability and mismanagement were the main reasons for the shipbuilder’s bankruptcy.
The court has appointed two law firms, Brinkmann & Partner and REIMER, as interim insolvency representatives to oversee the company’s operations. The team of administrators is evaluating the financial situation of the shipbuilding group in order to develop a reorganization plan for it.
In order to ensure payment of the short-term salaries of nearly 500 employees (about 340 at the Flensburg shipyard and 140 at the Lenzburg shipyard) including those from November this year to January next year, the insolvency administrator has also initiated insolvency pre-financing. However, according to German media reports, some of the employees have already been dismissed.
The interim administrator will also negotiate with shipowners who currently build ships at the Flensburg and Lenzburg shipyards. If necessary, the insolvency administrator will also work out a reorganization solution in cooperation with the German federal and state governments to cover the construction costs through interim financing.
Financial instability and mismanagement are the main reasons for FSG-Nobiskrug’s bankruptcy. Since December 1, the FSG shipyard has reportedly been operating without an electricity supply contract. Unable to pay its electricity bills, the power company cut off almost the entire power supply to the shipyard on December 9, local time.
FSG has long faced financial difficulties. in 2014, Siem Europe, the shipyard’s largest customer, acquired the shipyard, which was founded in 1872. in 2019 the shipyard approached bankruptcy and underwent two reorganizations. in April 2020, the shipyard filed for bankruptcy. FSG was then acquired by Tennor Holdings in September 2020, promising to revitalize operations.
FSG-Nobiskrug’s entry into insolvency proceedings is another example of the decline of the German shipbuilding industry.
Not long ago, after a number of efforts, the German government to save the construction of luxury cruise ships known as Europe’s century-old shipyard Germany Meyer Werft. Meyer Werft previously in deep financial difficulties, and even need to raise funds to pay staff wages, in order to avoid bankruptcy.
Meyer Werft although the order is sufficient, but because the cruise ship owners ordering the ship generally pay only 20% advance payment, the remaining 80% of the cost of the ship delivery at the time of settlement, the shipyard must hold sufficient funds in order to advance the cost of shipbuilding. The Russian-Ukrainian war led to a sharp rise in energy and material prices, further hitting Meyer Werft.
Caught in the bankruptcy crisis, the German federal government and Meyer Werft is located in Lower Saxony state government decided to jointly contribute 400 million euros to acquire 80.8% of the shares of the Meyer Werft, the federal government and the state government respectively contributed about 200 million euros. In addition, Meyer Werft will also receive loan guarantees worth 2 billion euros.
This also means that after the completion of the share deal, Meyer Werft will become a German state-controlled company. However, the Meyer family has the right to buy back the shares until 2028.
Subsequently, Meyer Werft announced that it had reached all necessary agreements with the government and banking parties to survive this bankruptcy crisis.