The interim manager took on the mandate to restructure the Wilhelm Kirchhoff Group in Iserlohn. As Chief Restructuring Officer (CRO), he joined the management team and found a company that was about six to eight weeks away from filing for insolvency.
The company had run into delivery difficulties. This resulted in significant contractual penalties and delistings from important existing customers. The interim CRO identified the incorrect introduction of an enterprise resource planning (ERP) system as the main cause of the problems. The interim manager was given the task of using a new ERP system to create transparency regarding inventories and future requirements. First, however, the company's solvency had to be maintained or restored. In close coordination with the shareholders, the CRO planned to secure liquidity and communicate with banks, trade credit insurers, leasing companies and other partners.
Detailed options created with associated opportunity and risk assessment
First, the interim manager created a detailed plan with various options and the associated opportunity and risk assessment. The company then decided to take the first step by communicating openly with the lenders to reach an agreement that freed it from debt servicing in order to avert the threat of insolvency.
Open communication leads to standstill agreement with the banks
The decision to communicate well and openly with the banks proved to be the right one. In intensive negotiations, the interim manager achieved a pooling of the banks involved with a standstill agreement and suspension of repayment. The favorable circumstances for the shareholders in the collateralization of company assets also contributed to this result.
Restructuring plan developed and restructuring report confirmed in accordance with IDW S6
The standstill agreement with the banks created time for the preparation of a restructuring plan and a restructuring report in accordance with IDW S6. The interim manager and his team drew up a detailed business plan covering three years (turnover, sales, costs, investments and liquidity). In consultation with the shareholders and the bank pool, the latter was prepared and confirmed together with an auditing company (KPMG). On this basis, a restructuring agreement was concluded with all external and internal stakeholders.
After intensive negotiations with the works council, the interim manager successfully concluded a redundancy plan. A 40-hour week without wage compensation was agreed. Previously, there was a 37.5-hour rule.
ERP system realigned and wage costs reduced
The interim CRO was also able to successfully complete the ERP project during the mandate. The resulting transparency enabled process optimization, which led to further savings in labour costs. The internal packaging of products was partly outsourced to upstream suppliers or transferred to external service providers. This also resulted in savings in labour costs.
Successful restructuring completed and move to the company's advisory board
As a result, the company has a significantly more vital cost structure, reduced complexity and gained opportunities to further optimize cost structures. Following the mandate, the interim manager moved to the company's advisory board and supported the company in this role for a further two years. He had previously trained a successor as CEO.
