Insolvency and Restructuring Proceedings 

VALTUS Management Factory has been supporting owners and companies in insolvency and restructuring proceedings for more than 25 years. Our Financial Advisory team prepares restructuring plans in coordination with the relevant stakeholders. Insolvency administrators also repeatedly rely on our services, as demonstrated by the example of KTM, in order to gain certainty and save time during insolvency proceedings.  

What is the difference between restructuring proceedings and insolvency proceedings? 

Restructuring proceedings constitute a broad collective term encompassing all processes aimed at reorganizing an economic entity in order to sustainably improve profitability, debt structure, equity, liquidity, and competitiveness. These proceedings may be implemented preventively and can take place either outside or within a judicial framework.  

Insolvency proceedings, by contrast, are legally defined judicial proceedings aimed either at restructuring or at the orderly liquidation of a company that is insolvent or overindebted.  

What options are available in insolvency proceedings? 

One possible path out of insolvency is restructuring or corporate rehabilitation (reorganization proceedings). In this case, a restructuring concept is developed that includes both financial and operational measures and is implemented through a restructuring plan. Alternatively, liquidation may take place, whereby assets are realized and the proceeds distributed according to the statutory order of priority (bankruptcy proceedings).  

In order to determine the most suitable course of action, the analysis of the company’s asset, financial, and earnings situation is of central importance. An assessment of the company’s viability as a going concern, as well as a transparent presentation of the economic situation to the court, insolvency administrator, and creditors, is required. In this context, liquidity status, going-concern financing plans, and liquidation and continuation ratios are determined. A key component is the appropriateness assessment, in which it is evaluated whether the restructuring ratio offered in the reorganization proceedings provides creditors with a higher recovery compared to liquidation.  

VALTUS Management Factory assumes responsibility for the economic support of insolvency proceedings and assists insolvency administrators through the aforementioned analyses and decision-relevant calculations. One reference project is the insolvency proceedings of KTM, in which VALTUS Management Factory acted as economic advisor to both the insolvency administrator and the company. Among other tasks, the appropriateness assessment was conducted, continuation financing and liquidity plans were validated, and various wind-down and sales scenarios were calculated and compared. In addition, services were provided as an independent expert for selected issues. Through this combination of analysis, scenario calculations, and expert assessments, a reliable basis for decision-making regarding potential further procedural steps was established.  

What role does financial restructuring play in restructuring proceedings? 

Financial restructuring comprises the reorganization of the capital structure and the adjustment of financing conditions while taking future liquidity development into account. The capital structure may be reorganized through refinancing measures involving debt capital, debt haircuts, or additional equity provided by existing or new shareholders. This is often accompanied by the renegotiation of loan conditions in order to reflect the changed circumstances. These measures form the foundation upon which operational restructuring and turnaround management can effectively build. Within corporate restructurings, these steps are considered essential, as stabilizing liquidity and ensuring long-term debt-servicing capacity are fundamental prerequisites for a successful turnaround.  

What does operational restructuring include? 

Operational restructuring directly addresses value-creation processes. Typical measures aim to achieve improvements in the areas of organization, production, procurement, sales, and efficiency management. This aspect of turnaround management therefore intervenes much more deeply in the business model than financial restructuring.  

In the case of KTM, operational restructuring was primarily characterized by a consistent strategic realignment. The focus was placed on returning to the core business, particularly off-road motorcycles, where KTM holds a global market share of more than 50%. At the same time, less profitable segments, including luxury street motorcycles and bicycles, were systematically scaled back. Through this strategic focus, operational performance was strengthened and the basis for sustainable continuation was established. Management Factory was responsible for reviewing the appropriateness of the 30% ratio offered by Bajaj and for validating the continuation financing plan.