Lawyer and insolvency rights specialist Detlef Specovius, self-administrator and managing director of SinnLeffers, working with Schultze & Braun, prepared the insolvency plan. He answers questions about how the reconstruction of the company was possible in such a short time overleaf.
Question: The local court in Hagen relieved SinnLeffers of the insolvency proceeding today through a cancellation order. How was that possible after only a half year since the filing of the petition to open insolvency proceedings?
Specovius: We decided early on to achieve the restructuring of the company through an insolvency plan procedure and had already begun preparing the insolvency plan before filing for insolvency in August 2008.
Question: What is an insolvency plan procedure?
Specovius: The insolvency plan procedure is a procedure deviating from the “normal” insolvency proceedings in which the company reaches agreement with its creditors. In my function as a restructuring consultant and self-administrator, I prepared the insolvency plan and then submitted to the court the final version in December 2008. The insolvency plan was about 120 pages and listed the restructuring measures in detail along with the payments to the creditors. Then on 9 March 2009, the court presented the creditors with the insolvency plan for approval.
Question: The creditors approved the insolvency plan with a large majority. Why is that?
Specovius: Because the provisons stipulated in the insolvency plan were much better for the creditors than if the company had been liquidated. The creditors saw that the company has a strong core business and can operate again in the market as a healthy company after implementing the measures stated in the rescue concept. In the long run this provides creditors with much more than a proportional payment of their claims which they would have received had the company been liquidated.
Question: You are the self-administrator: so, how were the insolvency proceedings organized in this special case?
Specovius: The court appointed a provisional insolvency administrator. However, we made an application for a self-administration order, known under Chapter 11 as “debtor in possession”, which the court agreed to. After this point in time, the restructuring of the company occurred through the management’s own efforts and the court appointed a trustee who only had the function as the supervisor. Nevertheless, we did everything in close coordination with him; he also helped with the drafting of the insolvency plan. This was a highly satisfying cooperation.
Question: Viewed from the outside one gets the impression that it was easy to reorganise SinnLeffers. Is this true, and if so, why?
Specovius: No, it was definitely not easy, in the current situation nothing can be easily reorganised – especially textile retail stores, because consumer spending has declined a lot. That it ran so quickly and smoothly, however, was largely because the employees, customers, vendors, banks, landlord, the management and the supervisor all pulled together.
Question: Earlier you were not a member of the management of SinnLeffers, but in actual fact you were brought in. When exactly was this?
Specovius: That was in the spring of 2008 when the crisis was getting closer and closer. I initially consulted the management on their restructuring questions, then I was added to the management and later, I took over the role of self-administrator.
Question: Is your job done now that the insolvency proceeding is finished?
Specovius: Yes it is. I will now withdraw from the management.
