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Germany

Germany

Fuhrländer struggles on through insolvency

GERMANY: Restructuring, a change of management and new ownership were all instigated as part of an effort to halt German-based turbine manufacturer Fuhrländer's descent into insolvency.

Fuhrländer has exclusive rights to W2E's 2.5MW turbine
Fuhrländer has exclusive rights to W2E's 2.5MW turbine

But at the end of September, an application to open insolvency proceedings was made at the Montabaur district court in Rhineland, and now the company is fighting for its existence.

The management had hoped that the restructuring under way since February and the ownership change in May - when a Ukrainian consortium named Windgrosse took around 80% - would see it through the doldrums. But delays to projects - and therefore payments - in the Ukraine and elsewhere threw its liquidity so far out of kilter that it had no other choice but to declare insolvency.

For its part, Fuhrländer declines to comment at this stage. But questions remain, such as why it was left in the lurch so shortly after the change of ownership even though the projects delayed in the Ukraine are owned by Windgrosse-owner Maxim Efimov.

Crucial relationships

The company released a statement in September about the insolvency. "Customer-side project delays caused unforeseeable postponements in payments, which Fuhrländer was unable to compensate," it said. But it is relationships with partners and customers that are likely to be pivotal to the company's future.

Last month, wind developer Windreich, which owns 17% of Fuhrländer, said it could not comment on the future development of the manufacturer because this would now be subject to an extensive investigation by an externally appointed trustee.

This is in contrast to Windreich's statement in August, when the developer said it was extremely pleased with the entrance of the new entrepreneurially dedicated and industrially oriented majority shareholder, and remained a committed shareholder of Fuhrländer.

Fuhrländer wind turbines are not being used for Windreich's current onshore wind projects, "so there will be no delays to these projects should Fuhrlander go into liquidation", the company said.

Possibly working in Fuhrländer's favour, a revision of Germany's Bankruptcy and Restructuring Act took effect in March.

This created what one source connected with the situation described as a friendlier framework for companies threatened by insolvency.

The legislation includes the creation of a provisional creditors' committee early on in the proceedings and new rules for setting up an insolvency plan of action that help to prevent individual creditors from blocking progress against the will of the majority of creditors.

Self-administration

For Fuhrländer, the court agreed to allow the company to operate under interim self-administration and continue with its restructuring without a change of management, albeit under the supervision of an insolvency administrator provided by German legal firm Koenig.

This situation will continue while Thomas Schmidt, an insolvency specialist at Koenig, produces a report - likely to take until the end of the year - into whether grounds for insolvency exist. Formal insolvency proceedings will begin if this is found to be the case.

A key player in Fuhrländer's future is engineering consultancy W2E in Rostock, the company that has supplied Fuhrländer's turbine designs. In 2011, Fuhrlander acquired 36% of W2E, while Fuhrländer subsidiary Boulder Licensing bought another 15%. At that time, Fuhrländer was considering going public with an initial public offering of shares, and stakes in company partners, which may have helped to boost company value.

Contractually, there is no profit transfer agreement, however, and W2E remains an independent company.

In a statement issued in September, W2E said the application for opening insolvency proceedings had no impact at corporate level. Its exclusive licence agreement with Fuhrländer for its 2.5MW turbine remains intact for the time being and provides a substantial basis for the continued existence of Fuhrländer.

W2E also continues to provide technological backup to Fuhrländer for any questions arising in connection with Fuhrländer's licencees. Additionally, W2E's non-exclusive licence for a 2MW wind turbine granted to small turbine builder Eviag, set up in Duisburg in spring 2008, passed to Fuhrländer when it acquired 100% of Eviag in 2011.

Licencing rules

But, crucially, if in the end Fuhrlander has to enter formal insolvency proceedings, rules kick into play that could allow W2E to annul one or both of these licence agreements and market the turbine designs elsewhere.

The rules are unclear concerning an exclusive licence for a 3MW turbine that was granted by W2E to Boulder Licensing, which the latter passed on to Fuhrlander. Whether this licence would be annulled is not clear since it is Fuhrländer rather than Boulder that would be insolvent.

Speaking to Windpower Monthly at the Husum WindEnergy show, Fuhrländer CEO Werner Heer said the firm's 2012 obligations for the European market would be unaffected and 60 turbines would be delivered.

What happens beyond this is conjecture, but the company has little else to say. A Fuhrländer spokeswoman said the company "asks for a little patience. As many procedures are currently under way we cannot attend to the questions until a later point in time".

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