Major Automotive Supplier Files for Bankruptcy: Over 1,000 Employees Affected

The automotive industry faces another significant setback as Schlote Group has filed for bankruptcy for its four German subsidiaries. The insolvency petitions were submitted to the District Court in Hildesheim, impacting Schlote Technology in Harsum, Schlote Gear and Drive Technology in Wernigerode, Schlote Brandenburg, and Schlote Harzgerode.

This troubling development follows the recent bankruptcy filing of Schlote Holding GmbH, the parent company. Reports indicate that three major banks abruptly canceled credit lines for the subsidiaries, leading to this drastic action. The total credit lines for the affected Schlote companies were approximately EUR20 million, as stated by the financial officer of Schlote, Michael Bormann.

Due to the sudden cancellation of credit, the subsidiaries were confronted with the challenge of settling a significant portion of their obligations, which they could not meet. Bormann expressed disappointment regarding the banks' decisions but refrained from assigning blame, emphasizing the need for focus on resolution rather than conflict.

Schlote's subsidiaries had been performing profitably until this unexpected turn of events. The current insolvency process could mean reduced financial returns for the banks involved, as they will face diminished recovery under these circumstances.

The immediate priority for the interim insolvency administrator, Manuel Sack, is to maintain stable production across all four facilities while fulfilling existing delivery commitments. He noted that discussions are ongoing with various clients in the automotive sector to ensure operations continue smoothly. Initial support from key clients has already been received, and preparations are underway to initiate a structured process to attract potential investors quickly.

Efforts are also being made to address the needs of creditors effectively and secure long-term employment for the approximately 1,350 employees affected by the insolvency. Salaries for the workforce are guaranteed for the next three months through insolvency compensation funds. Volkswagen, one of Schlote's largest clients, is also experiencing its own challenges, adding another layer of complexity to the situation.

The automotive supply chain has been under increasing pressure, and with the closure of another significant player in the industry, the ramifications could extend beyond Schlote's immediate stakeholders. As the situation develops, all eyes will be on how the restructuring efforts unfold and whether Schlote can find a viable path forward.