Big German builder files for bankruptcy

1st February 2005, Comments 0 comments

1 February 2005, AUGSBURG - Germany's construction industry crisis deepened on Tuesday when Walter Bau, the nation's third-largest building company, applied for bankruptcy. A judge at a court in Augsburg, where the company has its headquarters, appointed Bavarian attorney Werner Schneider as preliminary insolvency administrator. The move came after abortive efforts to put together a bail-out plan with creditor banks, according to a company statement. "Despite great efforts by corporate and financial sides

1 February 2005

AUGSBURG - Germany's construction industry crisis deepened on Tuesday when Walter Bau, the nation's third-largest building company, applied for bankruptcy.

A judge at a court in Augsburg, where the company has its headquarters, appointed Bavarian attorney Werner Schneider as preliminary insolvency administrator.

The move came after abortive efforts to put together a bail-out plan with creditor banks, according to a company statement.

"Despite great efforts by corporate and financial sides it was not possible to reach agreement with banks on a recipe for saving the company," the statement said.

The move does not affect subsidiaries of Walter Bau AG and there are good prospects of avoiding "significant" layoffs, it added.

"The board of directors of Walter Bau AG views insolvency as the last chance to avoid losing significant portions of the corporation and associated jobs," the statement said.

While the majority of creditors had supported the restructuring plans put forward at the beginning of January, "the necessary unanimous approval of all creditors has not been achieved. In addition, individual financiers have made additional conditions that have delayed the whole process, meaning that the short-term supply of liquidity has not been possible," Walter Bau said.

Public speculation about the state of the company's finances had harmed business and the placement of new orders, thereby making the liquidity situation even more difficult, the statement added.

The German construction industry has been in a slump for the past decade since the flurry of post-unification building projects ebbed in the mid-1990s.

Efforts by the federal government to shore up the industry have failed. Shortly after his 1998 election, German Chancellor Gerhard Schroeder made a much-hyped attempt to throw embattled construction group Philip Holzmann AG a USD 125 million life line.

Two-and-half years after Schroeder managed to convince major banks to join a rescue plan for Holzmann, the company's 152-year-old corporate history was finally laid to rest in an insolvency court in 2002. 

DPA

Subject: German news 

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