A right Royal mess

October 2015 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

Following a period of lengthy negotiation with its creditors, Royal Imtech N.V.’s German subsidiary Imtech Germany announced in early August that it had filed for insolvency in a German court. The filing, as noted by Royal Imtech in a statement, only applies to the German business.

However, the parent company is also experiencing financial difficulty. According to the German arm’s insolvency administrator, the collapse of the unit was brought about by Royal Imtech’s failure to pay the unit the $23m it was owed. “Due to the Dutch company’s current financial problems and the protection from creditors it has filed for, we do not expect this outstanding payment can be realised promptly,” Peter-Alexander Borchardt of Hamburg-based law firm Reimer Rechtsanwaelte, said in a statement.

Around a week after Imtech Germany’s filing, Royal Imtech filed a request for a suspension of payments in the District Court of Rotterdam. The Court subsequently approved the request and appointed administrators.

The company’s situation reached its nadir in mid August when Royal Imtech was officially declared bankrupt by the Court of Rotterdam. Imtech Capital B.V., Imtech B.V. and Imtech Group B.V. were also declared bankrupt.

Jeroen Princen, appointed trustee of Royal Imtech, said, “Taking into account the complexity of the situation we are pleased with the progress booked so soon after the suspension of payments. The banks, as material owners of the Imtech divisions, have been able to reach unconditional agreement for the divestment of two divisions. We believe that in light of the circumstances and required urgency, this step is beneficial to all stakeholders, including clients, suppliers and employees of the respective Imtech divisions.”

Once the bankruptcy of the parent group was made public, it was also announced that the company’s Nordic and Marine divisions were being sold off to private investors. Imtech, which employs 22,000 people in 35 countries and has annual sales of roughly $4.5bn, said in a statement that its Marine business would be sold to Pon Holdings and Parcom Capital and that “a sales process for the Nordic division is ongoing and expected to be concluded in the short term”.

The sale of these two units, according to the company, will allow around 7300 employees to remain in work, around 1300 of which are employed in the Netherlands. “Royal Imtech has been assured by the trustees in bankruptcy that they are geared to preserve as many Imtech group companies as possible in the interests of all creditors, employees and other stakeholders,” the company said in its statement. The firm is also believed to be in negotiations with a number of other parties which have expressed an interest in acquiring Imtech’s remaining assets in other jurisdictions. Assets in Spain, Belgium and Britain are potential targets for a number of would-be buyers. Furthermore, the company has received declarations of interest in its traffic and infrastructure division.

Sales of Imtech’s remaining assets will be used to help pay off the company’s outstanding debt obligations. Accordingly, the company notes that neither Imtech or its shareholders will enjoy any benefit from the sales.

Imtech’s financial difficulties have been ongoing since 2013 when significant, widespread corruption and accounting fraud was unearthed at the firm. The company’s Polish and German units in particular were said to be accountable for malfeasance which caused Imtech to endure losses running to hundreds of millions of euros. A number of the firm’s senior management team were prosecuted for their roles in the scandal, however much of the damage was done. Imtech Germany is also the focal point of a government led anti-cartel investigation for allegedly conspiring to overcharge German energy firm RWE for building a power plant.

The firm’s toxicity was evident in 2014 when Imtech tried and failed to attract investors to a $660m rights issue. This failure left the company’s underwriters with control of around half of the company’s outstanding shares.

Richard Summerfield