KSM Castings Group applies for protective shielding process in Germany
- Corona pandemic significantly changes market conditions in the automotive industry
- Company to be restructured under own management
- Operating business continues without restrictions
Hildesheim, July 3, 2020. KSM Castings Group GmbH, one of the leading automotive suppliers of lightweight aluminum and magnesium die cast components for chassis, transmissions and engines, filed an application for a protective shielding process with the Hildesheim district court on July 2, 2020. The German automotive market is particularly affected by the effects of the Corona (SARS CoV-19) pandemic, with sharp declines in demand and production. In order to take account of these market changes, the company intends to restructure and reposition itself as part of the protective shielding process. In Germany, KSM Castings Group GmbH employs around 1,800 people at its four production sites in Hildesheim, Wuppertal, Radevormwald and Wernigerode. In 2019, KSM Castings Group GmbH generated sales of 360 million euros with its locations in Germany and the Czech Republic.
“We have recently been on a clear growth path in Germany. Then Corona arrived. We will have to adjust to a changed market after Corona," says Dr. Zhihua Zhu, CEO of KSM Castings Group. “That's why we will now position our company with the possibilities offered by the protective shielding process in such a way that we will again be sustainably competitive even under the new market conditions. Our shareholder supports the restructuring course we have taken and has promised his support.”
The protective shielding process does not affect the automotive supplier’s operating business. The production and delivery of components to automobile manufacturers and OEM partners continue without restrictions.
Slump in the German automotive market
According to the German Association of the Automotive Industry (VDA), passenger car production in Germany fell by 44% in the first five months of 2020 compared to the same period last year. According to the Association, a recovery is not yet in sight. This market slump also has a direct impact on automotive suppliers based in Germany, such as KSM Castings, which can only be partially offset by measures such as short-time working.
Only protective shield in Germany for KSM Castings Group GmbH
KSM Castings Group GmbH has around 2,350 employees in Germany and the Czech Republic and generated sales of 360 million euros in 2019. Only for the German production sites of KSM Castings Group GmbH, the protective shielding process was applied for. The “Schutzschirmverfahren" is a special form of insolvency in self-administration, in which the existing management develops a reorganization or restructuring plan. It is only applied if the company has a fundamental prospect of successful restructuring and is not insolvent.
Management is strengthened with restructuring experts
Lawyer Prof. Dr. Gerrit Hölzle and lawyer Dr. Thorsten Bieg were appointed to the management of KSM Castings Group GmbH as Chief Insolvency Officer (CIO). The restructuring and insolvency specialists from GÖRG law firm have extensive experience in self-administration proceedings. Attorney Dr. Rainer Eckert was appointed as the preliminary administrator of the proceedings by the Hildesheim District Court.
The management under the leadership of CEO Dr. Zhihua Zhu will develop a concrete restructuring plan together with the restructuring and insolvency experts in the next few weeks. The extent to which the personnel capacities of the production sites in Germany will also have to be adjusted has not yet been determined at this time.
About KSM Castings Group GmbH
KSM Castings Group GmbH is one of the leading automotive suppliers of lightweight die-cast aluminum and magnesium components for chassis, transmissions and engines. KSM Castings GmbH employs around 2,350 people at five production sites in Germany and the Czech Republic. Customers include automobile manufacturers and OEM suppliers such as Volkswagen, Daimler AG, BMW, ZF, Benteler and Bosch. In 2019, the company generates sales of 360 million euros.