(Motorsport-Total.com) – As announced, the motorcycle manufacturer KTM filed for bankruptcy with personal obligation at the regional court in Ried im Innkreis (Upper Austria) on Friday. Specifically, it concerns KTM AG adn its two subsidiaries KTM Components GmbH and KTM Forschungs und Entwicklung GmbH.the three bankruptcies affect 3,623 employees.
KTM AG has registered restructuring proceedings with two subsidiaries
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according to the restructuring request, KTM AG has debts of 1.8 billion euros. The liabilities of the three companies come from Alpine Accreditation Association (AKV) In total estimated at up to 2.9 billion euros with about 2,500 creditors.
KTM AG has about 1.3 billion euros for several austrian banks. The company is in debt to suppliers for approximately 365 million euros.There are also promissory notes worth 80 million euros and unpaid salaries for employees worth 40 million euros.
So far, Pierer Mobility AG has spoken of a financial need in the “high three-digit million range”. In the last few days, financial experts have estimated that the figure could be as high as one billion euros.
The debt for KTM AG of almost two billion euros and for all three companies of almost three billion euros that made waves in Austria on Friday was a surprise. It is the biggest bankruptcy in the Alpine Republic this year.
The insolvency proceedings have not yet started. That could still happen on Friday. The creditors should receive a 30 percent quota, which should be payable within two years after the approval of the restructuring plan.
KTM boss Stefan Pierer wants to fight “for his life’s work”. Zoom
A restructuring plan should now be negotiated with the creditors.It should be clear within the next 90 days whether this will be accepted. So at the end of Febuary there will be certainty about the future.
Austrian Minister of Labor and Economics Martin Kocher says i ORF: “I expect clear answers from KTM as to how it could happen, from a good earnings situation and good prospects, that we move so quickly to a restructuring process.”
Thousands of employees fear for their jobs
Many employees are afraid of their jobs. The 3,623 affected employees will no longer receive their November salary and Christmas bonus from their employer. These are to be paid through the insolvency compensation fund. This can take months.
KTM has announced that it will pay wages for the month of December next week. It has also been confirmed that an additional 500 jobs will be cut by the end of the year. In January and February, production in Mattighofen comes to a halt, along with a short-time working model of 30 hours.
Production stops in Mattighofen in January and February zoom
“Of course we as politicians want to help and support the scene,” said the Governor of upper Austria, Thomas Stelzer (ÖVP). WHAT mentioned. “We are doing everything we can to save the plant and the jobs.”
But: “EU state aid law and insolvency law currently issue de facto liability.” The federal state of Upper Austria is “on hand when it comes to helping the affected employees – together with AMS and social partners”.
A major challenge for the Austrian labor market service
It was also announced this week that automotive supplier Schaeffler would be closing its factory in Berndorf, Lower Austria. Wheel bearings,wheel hub modules and gearbox bearings are manufactured there.Production moves to Slovakia and romania.
At Schaeffler in Berndorf alone, 450 jobs are affected. The employment service in Austria (AMS) faces major challenges. Collaboration has already been announced at the AMS offices in Upper and Lower Austria.
Johannes Kopf is CEO of the Austrian Public Employment Service Zoom
On Thursday afternoon, Austrian AMS board member Johannes Kopf sa News ORF ZIB2: “Many employees at KTM, but also people who live in Mattighofen and the surrounding area, for whom this company is so important, cannot understand what happened there.”
“In the spring, last year’s profits were paid out, in the summer the owner bought another company (Rosenbauer, editor’s note), and now bankruptcy is being filed.”
“I want to convey not only our support to people, but also my condolences. This is a big blow,” said Kopf. It is not certain how many other companies and suppliers in Austria fought for survival as a result of KTM’s bankruptcy.
What are the potential consequences of KTM’s bankruptcy for its workers and the local economy?
Interview between Time.news Editor and Financial Expert on KTM Bankruptcy
Time.news Editor: Welcome, and thank you for joining us today. We have some significant news from the world of motorsport — the prominent motorcycle manufacturer KTM has filed for bankruptcy. Today, we’re speaking with financial expert Dr. Anna Weiss, who will help us unpack what this means for KTM, its employees, and the industry at large. Dr. Weiss, thank you for being here.
Dr. Anna weiss: It’s my pleasure. Thank you for having me.
Editor: Let’s dive right in. KTM AG, along with its subsidiaries, has stirred quite a reaction in austria with this news. The company’s reported debts total around 1.8 billion euros. How does this figure compare with industry standards? Is this a common situation in the automotive sector?
Dr. Weiss: The debt levels KTM is reporting are indeed alarming, especially for a company of its stature. With total liabilities amounting to nearly 2.9 billion euros across three entities, this situation is quite severe. While some automotive and motorcycle manufacturers do face financial strain, a bankruptcy of this magnitude is not typical, especially in a high-profile company like KTM. It raises concerns about mismanagement or unforeseen economic pressures.
Editor: You mentioned the possibility of mismanagement or economic pressures; could you elaborate?
Dr. Weiss: Certainly. Often, companies in distress face challenges from both internal and external factors. In KTM’s case, their debts to banks, suppliers, and even unpaid salaries paint a picture of a cash flow issue, which could result from increased production costs, a drop in sales, or perhaps even strategic miscalculations in their investment plans. Additionally, the motorcycle market is highly competitive and affected by broader economic trends, such as consumer spending habits and supply chain disruptions.
Editor: That’s insightful.As reported, creditors are expected to receive a 30% quota over the next two years after the restructuring plan approval. How realistic is this payout for creditors?
Dr. Weiss: A 30% payout is a common figure in restructuring scenarios; it offers some recovery for creditors and allows companies to stabilize. However, actual payouts can depend on the success of the restructuring, the company’s ability to generate revenue, and the overall economic environment. If KTM can regain financial footing and improve sales, this deal could be more feasible. But if it struggles,creditors might receive even less,or potentially face longer recovery periods.
editor: What does the timeline look like moving forward? You mentioned that a restructuring plan will need to be negotiated. What are the key steps involved in this process?
Dr.Weiss: Yes, the clock is certainly ticking for KTM. The company has about 90 days to negotiate a restructuring plan with creditors. This involves assessing their financial obligations, creating a new financial structure that can support operations while keeping creditor interests in mind, and potentially renegotiating terms with banks and suppliers. if they can present a solid plan that all parties can agree upon,they may have a chance to emerge stronger from this crisis.
Editor: And what impact might this have on the employees,given that over 3,600 jobs are at stake?
Dr. Weiss: It’s a tragic situation, especially for employees facing uncertainty about their jobs. With a bankruptcy of this size, layoffs are a common response to cut costs. The hope lies in the restructuring process — if successful, it might preserve jobs and stabilize the company. Though, the reality is that many employees may face significant anxiety as they await the outcome in the coming months.
Editor: Looking at the broader picture,what does KTM’s bankruptcy signal for the motorsport and motorcycle industry in Europe?
Dr. Weiss: This is certainly a wake-up call for the entire industry. It highlights the vulnerabilities companies face in our current economic climate. As we see in KTM’s case, even well-established firms are not immune to financial distress. It could prompt other companies to reevaluate their own financial strategies, focus on enduring practices, and perhaps even consider consolidating efforts to remain competitive.
Editor: Thank you, Dr. Weiss, for shedding light on this complex situation. It truly seems KTM’s future hinges not just on their restructuring efforts, but also on broader economic conditions.
Dr. Weiss: Exactly, and as events continue to unfold, it will be crucial to monitor not just KTM, but the automotive sector’s response as a whole.
Editor: We appreciate your insights. We’ll certainly keep a close eye on this developing story. Thank you for joining us today, and for our readers, stay tuned for more updates regarding KTM and the impacts on the motorsport industry.