The interim manager was hired by a bioenergy company with an annual turnover of 800,000 euros as interim managing director to avert the impending insolvency of a biogas plant. His task was also to identify solutions for the continued economic operation of the plant. He was also tasked with determining the economic feasibility of technical restructuring options.
Significant negative deviations from the business plan and disputing shareholders
The business plan showed significant negative deviations from the actual figures. The investment did not generate the forecast results. Despite higher refinancing costs (interest expenses) and losses, distributions had been made to the shareholders.
In addition, the shareholders were divided. the plant manufacturer itself held 50 percent of the shares. The other 50 percent was held in equal shares by two private individuals. There were many shareholder meetings at which important resolutions could not be passed as the necessary majorities could not be formed. As a result, maintenance measures and necessary replacement investments were not carried out. As a result, repair costs increased as operations progressed, which in turn had an impact on liquidity. In addition, the costs for the substrate supply were considerably higher than originally planned. In addition, there was no adequate revenue for the heat sales.
Cause of the over-indebtedness identified and positive going concern forecast prepared
The interim manager began the mandate by recording the current technical and economic status of the biogas plant and comparing the target and actual business figures. At the same time, he looked for the causes of the deviations. Above all, however, he thoroughly analyzed the liquidity situation.
The result was clear: the company had negative equity of 1.6 million euros, liabilities of three million euros and a net loss for the year of minus 0.42 million euros. The company was therefore overindebted. There was a risk of insolvency and therefore possible bankruptcy. In order to avert this, it was necessary to prepare a positive going concern forecast very quickly. The interim manager drew up several going concern forecasts, which differed in particular in terms of liquidity requirements.
As a mediator, the shareholders' meeting's ability to act was restored
In order to set the course for the restructuring, the differences among the shareholders had to be resolved to such an extent that the upcoming shareholders' meetings could come to resolutions. In numerous one-on-one meetings, the interim manager as mediator succeeded in creating a basis. As a result, he was able to negotiate a settlement with the financing bank and the shareholders to avert the over-indebtedness situation.
The company's debt burden also included a silent partnership from state funds of 200,000 euros, which could not be repaid in accordance with the contract due to the poor economic situation. The interim manager negotiated an arrangement with the state authorities that was acceptable to the company and improved the liquidity situation in the long term.
Renegotiation of the substrate supply and new substrate mix allow higher electricity revenues
The company's difficulties also included the substrate supply for the biogas plant. There were no long-term supply contracts and the substrate costs were around 30 percent higher than planned. The amount of substrate stocks only lasted until the harvest time in early summer. Due to the negative economic situation, no further lenders could be found. The shareholders were also unwilling to provide any further financial resources.
The interim manager therefore had to renegotiate the contracts with various suppliers in order to be able to replenish the stocks in time. These discussions proved to be very difficult. The interim manager was unable to negotiate price reductions. However, he did manage to get the suppliers to deliver significantly better quality. These substrates made it possible to increase electricity production by around ten percent. This additional result significantly compensated for the additional costs for the substrates.
The interim manager achieved further improvements in the operating result by realizing additional revenue from heat sales. He also reduced the costs for technical and commercial management by renegotiating the corresponding contracts.
Insolvency averted and restructuring plan for sustainable continued operation presented
As a result, the over-indebtedness was eliminated and the liquidity situation significantly improved within the 18 months of the interim mandate. Insolvency was averted. The work of the interim manager laid the foundation for stabilizing the economic operation of the biogas plant for the future. At the end of the mandate, the interim manager drew up an investment plan for the necessary technical investments.
