Kinen is a medium-sized Chinese supplier of bathroom fittings that has positioned itself as a high-quality company in its home market and equips larger hotels, among other things. Abroad, Kinen is represented in Australia, for example. In fall 2016, Kinen bought the German SAM Group out of insolvency.
SAM was a German group of companies based in Menden and Leipzig with a 40-year history (respectively 100 years in Leipzig under the name SAF) and 220 employees. SAM produced fittings (in Leipzig) and accessories (in Menden) for bathrooms and also imported extensive items from China. Today, only a rudimentary sales unit remains.
The interim manager was approached shortly before Christmas 2016 and began working as the permanent CFO of the SAM Group at the beginning of January 2017. In addition to finance, he was responsible for HR and IT. His task: to set up a controlling system and automate production in depth.
The new owners' strategy was quickly overtaken by reality
The new owners' initial strategy was quickly overtaken by reality. The stock of the most popular items was empty. To avoid losing major customers, they wanted to fill it as quickly as possible. This required extensive imports, purchases of raw materials and temporary workers.
At the same time, the interim manager carried out an inventory in his area of responsibility, which led to the following activities:
- Accounting for the purchase with suspensive effect from the first of March
- Splitting up the acquiring company with a total of 3 personnel transfers
- Supporting and concluding a total of 20 proceedings before the labour courts due to the indiscriminate dismissals in the purchase process
- Drafting new personnel contracts
- Setting up controlling with associated sales and production stops for half of the company
- and production stop for half of the items
- Introduction of a new process for determining production costs and revaluation of inventory
- Fundamental safeguarding of IT
Concept for financing and comprehensive business plan created
The aim was to stabilize operations through a series of personnel measures and initial process changes. In particular, this included upgrading the ERP system Microsoft Navision to the latest version and updating parts of Datev. Due to the advanced age of the systems, this meant massively restructuring all processes over the course of a year.
At this time, it became clear that the Chinese owners were no longer able or willing to contribute any more capital. As a result, the interim manager was tasked with creating a strategy for the financing and mapping it out in a comprehensive business plan. In addition, a vision for the future of the company was developed with external support, which focused on growth with all locations and production steps. The CFO successively presented this strategy to a number of interested parties and banks in Germany and abroad. However, this did not result in an inflow of funds.
Restructuring plan developed with plant closures and sale
In the end, the interim manager managed to change course. The plan emerged to close the plant in Leipzig due to poor capacity utilization and to sell or outsource production in Menden. The SAM Group was therefore to focus on customer contact, design, development, assembly and a perfect product surface.
At the same time, the managing director of the SAM Group was replaced by the owner, who was in China, and the current interim manager was appointed as an authorized signatory and de facto managing director. In his new role, he focused on motivating the employees and restructuring the company at the same time. While the former quickly brought success, the rapid realignment failed. The sale of the electroplating plant in Menden was blocked by the owner. The closure of the plant in Leipzig was postponed due to a lack of funds for severance payments, even though a social plan had been agreed with the Leipzig works council.
Significant parts of the acquired company are sold
From late autumn 2017, the finance department monitored the company's solvency and debt in detail and had this monitored by auditors and tax consultants specializing in insolvencies. As a result, the CFO came to the conclusion in April 2018 that SAM was obliged to file for insolvency. After disclosing this, he was dismissed.
The Navision project was then completed, but otherwise all development work was discontinued. Other managers left the group and tools were sent to China.
In the ensuing insolvency, the plant in Leipzig was closed and the electroplating facility in Menden was sold to an interested party that the interim manager had previously acquired. The rest of the production was disposed of. A shell of the sales department was sold.
