The subsidiary Harfid GmbH of Harfid Holding GmbH in Essen has filed for provisional insolvency proceedings in order to reorganise itself. On 16 September, preliminary insolvency proceedings were opened against Harfid GmbH. What impact could the insolvency have on investors’ money?
The significance of the Harfid insolvency for investors and their capital
Harfid insolvency: The preliminary insolvency proceedings are intended to help in the restructuring of the subsidiary of Harfid Holding. In this way, the construction company hopes to get back on its feet economically. Harfid GmbH, like many other companies in recent years, has felt the effects of the Corona epidemic and the Ukraine war.
Harfid is being accompanied to court by the auditing firm “Lohr +Company” from Düsseldorf. The provisional insolvency administrator is Dr Biner Bähr from White & Case. All construction sites were closed by Harfid GmbH, a division of Harfid Holding GmbH, during the pandemic shutdown.
Attempts to obtain funding from the government were unsuccessful. Even though supply bottlenecks and significant price increases were symptoms of the problem during the Corona epidemic, the war in Ukraine dramatically exacerbated the distortions in the global raw materials and logistics market.
Delays and cost increases were the result of the unavailability of supplies. This unintentionally led to delays in the initiation and processing of orders at Harfid GmbH. The company has so far been able to defy the effects by raising new funds.
By and large, however, this is no longer sufficient to cope with the next tasks. Harfid GmbH is forced to reorganise itself with the help of provisional insolvency proceedings and to undertake the necessary restructuring to remove all these obstacles.
Business operations will continue in full during the preliminary insolvency proceedings, the company says.
Do investors have to prepare for losses?
Harfid Insolvency: According to the current position, this is at least to be affirmed for investors who invested with a subordinated loan. This seems to affect investments of more than 2 million euros in the construction projects:
- North Sea Gaarden
- Barbara courtyards
Although the project companies are solvent, the close financial ties with Harfid GmbH appear to be associated with a high risk of loss. For this reason, investors should already have their claims for damages examined and secured before it is too late.
Claims for damages usually arise in cases where insufficient or timely information about the existing risks was provided. In particular, the subordinate risk must be fully disclosed, according to case law. If it can be proven that this was not done, the injured party is entitled to damages in the full amount of the investment.
Harfid insolvency: What investors should do now
The companies involved in the initiative are not bankrupt, but their finances are intertwined. The annual financial statements for 2020 show that Harfid GmbH co-financed some of them. The drop in profitability to less than 10% and the tripling of liabilities to affiliated companies compared to the previous year should also be taken into account.
If you as an investor have concerns about your investments due to the Harfid bankruptcy, you should contact a lawyer specialising in banking and capital market law. The Herfurtner law firm is happy to offer you a free initial consultation in which your case will be thoroughly and openly assessed.
Harfid Insolvency: We are at your disposal with our team of lawyers in Germany, Switzerland and Austria.