German seating manufacturer ZIM Flugsitz filed an application for debtor-in-possession insolvency proceedings with the Local Court of Constance. The company cites a “persistent and considerable decline in sales” in recent months in forcing its need for legal protections.
The entire aviation industry is experiencing an unprecedented slump due to the coronavirus pandemic. The months ahead will be very challenging for our company. However, I’m convinced that we will overcome this crisis under the protection afforded by debtor-in-possession proceedings.– ZIM Managing Director Mr Heiko Fricke
ZIM launched as an aircraft structural engineering company in 1995 and pivoted to aircraft seating in 2007-2008 with the launch of the ZIM Flugsitz subsidiary. In the intervening years the company has seen significant commercial success, with its economy, premium economy and (regional) business class seats certified and installed at airlines around the globe. The EC-00 Economy Class seat won the Crystal Cabin Award for Passenger Comfort Hardware in 2014.
In 2017 the company inaugurated its second production facility at Shwerin, closer to the Airbus Finkenwerder final assembly line near Hamburg. The company also launched a BFE contract with Airbus at that time, expanding the offerability of the ZIM seating products to airlines.
Akin to Chapter 11 Bankruptcy filing
The debtor-in-possession filing is similar to a Chapter 11 bankruptcy in the USA. It allows an affected company to restructure debt and operations while continuing operations. The management team remains in charge and carries out the restructuring itself under the supervision of the court and an insolvency monitor.
The court provisionally approved the filings, with attorney Mr Martin Mucha from law firm GRUB BRUGGER appointed as provisional insolvency monitor. Management at the aircraft seat manufacturer based in Markdorf, in the Federal State of Baden-Württemberg, will be supported by experts Mr Jochen Glück and Dr Maximilian Pluta from the PLUTA restructuring company.
PLUTA restructuring expert Mr Jochen Glück, who is supporting management as Chief Restructuring Officer (CRO), said: “The current situation is not easy. The aviation industry is still reeling from the effects of the coronavirus pandemic. The company is known for its high-quality products, and the debtor-in-possession proceedings give us an opportunity to put the business on a viable footing. We will review each process together with all stakeholders and adjust them in line with the changed situation.”
ZIM Flugsitz employs more than 200 people whose salaries are guaranteed thanks to specific substitute benefits provided under German insolvency law. In spite of the circumstances, the business will remain fully operational during this period. The application was filed due to a persistent and considerable decline in sales since the start of the coronavirus pandemic. Given the travel bans in place and the collapse in passenger demand, the entire aviation industry is currently facing major economic challenges.
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