German engineering group Babcock Borsig said it had filed for insolvency because talks failed to produce a rescue plan prior to the Friday deadline, but stressed that this did not mean the talks had failed irrevocably.
The future of Babcock Borsig is on hold for the moment
The tradition-rich engineering group said in a statement on Friday that it had, for legal reasons, been "forced to file for insolvency at the district court of Duisburg." But it said it had agreed with Wolfgang Clement, premier of the German state North Rhine-Westphalia, that intensive talks should continue with a view to obtaining the necessary financial support for its restructuring plan.
So far, the group has failed to get its creditor-banks behind the plan, which they say lacks substance. Its aim is to enable the group to put its business on a new footing after its controversial sale of HDW, the world’s leading producer of conventional submarines.
Babcock's estimated funding requirement is 700 million euro including the 200 million it needs immediately. So far, North Rhine-Westphalia has promised to issue credit guarantees covering almost half of the sum, according to Clement.
Some 22,000 jobs are at stake, over 13,000 of them in Germany.
A spokesman for Babcock’s works council said it was now to be hoped that Clement could still pull the rabbit out of the hat. In the event of an agreement, the group would still be able to withdraw its insolvency application and avoid any lasting damage, the spokesman added.
Meanwhile, Babcock’s management board has come under attack from IG Metall, Germany’s trade union for the engineering sector. Hannelore Elze, the union’s representative on the Babcock supervisory board, described the group’s information policy as "catastrophic" and it said the group’s management in recent years had been characterized by a series of miscalculations and false moves. Now, she said, all hopes had to be pinned on the state and federal governments.