MIFA Mitteldeutsche Fahrradwerke AG filed for the European equivalent of a Chapter 11 bankruptcy Monday after it failed to reach a final agreement with an Indian company that had agreed to recapitalize the German bike manufacturers.
MIFA said it filed an application to open insolvency proceedings in self administration with the district court of Halle (Saale) to facilitate its ongoing restructuring. The company plans to continue its restructuring and immediately seek new investors.
MIFA it was forced to file for insolvency after negotiations broke down with Hero Cycles Ltd., India’s largest bicycle manufacturer. On Aug. 22 Hero agreed to recapitalize MIFA through its subsidiary OPM Global B.V.
“Despite intensive negotiations with those responsible at Hero it has so far not been possible to achieve an ultimate solution in one part of the agreement. For this reason, I have decided in view of my responsibility for the MIFA employees to file an application with the district court”, said Dr. Stefan Weniger, at present the sole managing director of MIFA. “The instrument of self-administration gives us the possibility to continue the successful restructuring process that has been launched on our own and ensure trouble-free continuation of the operative business.”
Provided that the Amtsgericht consents to the self-administration applied for, the MIFA board of management will be provided with a preliminary custodian (Sachwalter). Business responsibility will remain in the hands of the board of management with Weniger, who at present is the sole managing director and who will be joined by Thomas Mayer on Oct. 1 as announced. Mayer will have responsibility for business operations.
For the court to approve the plan, MIFA must prove it has a viable business operation, which Weniger contends it does.
“We are basically in a position to execute the order in our books, which are well filled, as planned and we cannot run the risk of endangering problem-free continuation of business due to delays in implementing the restructuring of capital,” said Weniger. “After all, performance-related restructuring must be implemented at an early date in addition to financial restructuring. The application does not affect the positive assessment of the industrial restructuring capacity of MIFA.
The board of management plans to continue operating the business and begin immediately looking for new investors.
“The signals are clear: MIFA has made very good progress in restructuring through its own efforts in the last few months. The overall restructuring plan that is still being implemented provides for comprehensive measures for the future strategic and operative development of the business operations. Coupled with the large market potential of the bicycle industry, I am convinced this forms an ideal basis for us to return to profit as early as in the 2015 financial year. I am convinced that MIFA as a forward-looking company in an industry of the future will be of great interest to plenty of investors”, said Dr. Weniger.
The wages and salaries of the employees, which numbers around 600 at present, are guaranteed by the Bundesagentur für Arbeit (federal employment agency) for three months.
Headquartered in Sangerhausen (Saxony-Anhalt), MIFA assembles more bicycles in Germany than any other company. It sells primarily both entry level and premium bicycles to both major retail chains and OEMs (Original Equipment Manufacturers). The company has made e-bikes since 2011. It currently produces e-bikes for automotive manufacturer Smart, the Deutsche Post bicycle fleet, and bike lending systems with multi-user vehicles, among other customers. In 2012, MIFA acquired Berlin-based e-bike manufacturer Grace and Bavaria-based Steppenwolf to expand its sales to independent bicycle dealers. MIFA sells its bicycles predominately on its domestic German market. Further sales markets are located mainly in Western Europe.
Both the operating business and administration and logistics are managed at the company’s sole production location in Sangerhausen.
MIFA shares are traded in the Prime Standard of the Regulated Market of the Frankfurt Stock Exchange.
