Epsotech, a German manufacturer of extruded engineered polymer sheet materials, announced it is entering self-administration restructuring proceedings.
The firm has filed the corresponding applications for its three German entities - Epsotech Holding GmbH, Epsotech Germany GmbH, and Epsotech Color GmbH – with the responsible local court in Cologne.
Subsidiaries Epsotech Austria, France, UK, Italy, and Axipack SAS are not included in the self-administration proceedings and their business operations are not affected by the insolvency of their German counterparts, Epsotech Group said in a statement.
Insolvency in self-administration is comparable to a Chapter 11 reorganisation in US law. It allows the company to reorganise its finances and business and leaves the company's management in control. An insolvency trustee is appointed by the court to both advise and supervise the procedures.
Epsotech said it aims to ‘swiftly conclude’ the proceedings by presenting the Cologne court reorganisation plans in the ‘next few months’. Its CEO Predrag Skender will be supported by experts from the law firms Heuking and Schultze & Braun.
The company said the wages and salaries of its approximately 140 employees in Germany will be covered by insolvency benefits paid by the German Employment Agency until October.
From November, Epsotech expects to be able to start paying wages and salaries again from revenue ‘generated from ongoing business operations’.
"We want to use the self-administration proceedings to continue and finalise the realignment in Germany that we have already embarked on,” said Skender. “We are very confident that we will succeed in doing so. The business model of Epsotech Germany is fundamentally intact but has been affected by external factors and crises until recently. This means that there is no alternative to reorganising the German Epsotech companies,” he explained.
Epsotech develops and manufactures plastic sheets for vehicles, buses and trains, aeroplanes, ships and medical devices, amongst other applications. The company has seen a ‘major decline in sales’ in several business areas, it said in a statement. The rising interest rates and high prices for materials has affected its operations worldwide, particularly in Germany.
"The challenges that have persisted for several years now have not left us or our customers unscathed,” Skender said. “Fewer sales or orders in our customers' industries inevitably means fewer orders for us as a supplier. Many of our customers work with us regularly. However, as they are also affected by the economic impact of the crises in their industries, they have not been able to place orders with us as usual.”
“We work for a large number of customers from different industries, and orders - for example for the automotive, caravan and construction industries or orders in the aircraft or railway sector - are usually large in volume,” Skender continued. “As a result, we were no longer able to compensate for the decline in sales that has now been ongoing for several years, even though we are increasingly gaining customers in other sectors. As a first step, we have already begun to adapt our production capacities and processes to the changed framework conditions and are now taking the next and already announced step towards becoming a centre of excellence for polyolefins and speciality plastics with the self-administration procedures in our realignment."
Skender concluded by reiterating Epsotech’s commitment to sustainability and the circular economy. In 2021, the company launched a recycling campaign and said it would work to offer a fully recyclable portfolio in the medium term. Epsotech’s Nature recycled HDPE material solutions for playground applications was a finalist at this year’s Plastics Recycling Awards Europe.
Epsotech joins other German plastic companies filling for insolvency, including Illig, Kautex, and Heubach.
The country was particularly affected by the energy crisis that followed Russia’s invasion of Ukraine in February 2022 and has since been struggling with high inflation, interest rates, and prices, alongside most of the globe.