German Mittelstand Restructurings Turn Chaotic as 100-Plus Schuldschein Creditors Can Block Debt Changes
Updated
Updated · Bloomberg · Jun 20
German Mittelstand Restructurings Turn Chaotic as 100-Plus Schuldschein Creditors Can Block Debt Changes
1 articles · Updated · Bloomberg · Jun 20
Summary
More German and Austrian mid-sized companies are running into disorderly debt workouts because Schuldschein loans can be changed only with unanimous creditor consent.
That rule leaves no single lender group in charge, so even a few holdouts can derail a deal and push a struggling borrower closer to insolvency.
At KTM AG, more than 100 creditors joined a video call on a counterproposal after the motorcycle maker presented an insolvency plan last year, illustrating how fragmented these negotiations have become.
The pressure is building as Mittelstand borrowers face higher energy costs and tougher competition, undermining a market long viewed by investors as a relatively safe haven.