Credit: Adler
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ADLER begins restructuring in insolvency proceedings due to Corona – related burdens

The management board of Adler Modemärkte AG filed an application for the opening of insolvency proceedings in self-administration pursuant to Section 270a of the German Insolvency Code with the local court of Aschaffenburg on 11 January 2021.

The local court has consequently approved preliminary self-administration today. Within the scope of the preliminary self-administration, it is planned to continue the business operations of Adler Modemärkte AG in their entirety. For this purpose, the management board of the Company continues to have the power of administration and disposition. The application pursuant to Section 270a of the German Insolvency Code was filed in accordance with the stricter requirements for self-administration introduced by the German Act on the Further Development of the Restructuring and Insolvency Law (Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz), which are in force since 1 January 2021.

The aim is to restructure the Company in the course of the proceedings by means of an insolvency plan. For its support with the upcoming measures, the management board appointed the lawyer Dr. Christian Gerloff, who is a proven expert for restructuring and insolvency cases in the textile retail sector, as general representative. The local court has appointed the lawyer Tobias Wahl, Anchor Rechtsanwälte, as preliminary custodian (Sachwalter).

The example of ADLER shows that in the textile retail sector, even a company that at the end of 2019 had still reported record net liquidity of €70.1 million, a high consolidated net profit and a very solid balance sheet quality can find itself in an existential crisis through no fault of its own and within just 12 months.

After a drop in sales due to the first lockdown in the months of March to May 2020, ADLER had seen a noticeable recovery trend in the third quarter and well into October 2020. However, the renewed restrictions on public life since the end of October led to significant sales losses. This situation was massively exacerbated by the officially ordered closure of all stores in Austria in November and, since 16 December, also in Germany. Even the focus on maximum cost efficiency and liquidity generation initiated by the management board could not prevent the insolvency application.

Subsidiaries in Austria, Switzerland and Luxembourg not affected

The court also approved the applications of Adler Mode GmbH, Adler Orange GmbH & Co. KG and Adler Orange Verwaltung GmbH, all of which are wholly-owned subsidiaries of Adler Modemärkte AG, for the opening of insolvency proceedings in preliminary self-administration and also appointed the lawyer Tobias Wahl as preliminary custodian (Sachwalter) for each of these companies. The management of these companies will also be supported by Dr.Christian Gerloff as general representative. Other domestic and all foreign subsidiaries of Adler Modemärkte AG are currently not affected and continue their business operations without any changes.

“The management board will do everything in its power to ensure that ADLER’s loyal customers continue to receive the products and services they value and that the jobs of our highly motivated employees can be preserved”, said Adler Modemärkte AG’s CEO, Thomas Freude.

Market-leading position and established business model as basis for return to profitable growth

Despite the current developments, ADLER believes that it is well positioned to return to profitable growth in future following the financial restructuring, given its market-leading position in the affluent segment of the 55+ age group and its unique customer loyalty via more than three million active customer card holders. In this context, the Company also communicated a new strategy program under the project name “New ADLER” at the beginning of October, which involves the consistent further development of the successfully established stationary business in the more than 170 fashion stores and a massive expansion of online activities. The management board will continue driving forward the measures contained in the strategy program to establish a fully digital value chain, streamline structures and processes, and implement further efficiency enhancement measures.

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