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German Firms Head To London To Relieve Debt

by Jim ONeil on July 25, 2011

in uk loans news

In the June 10 Sunday Telegraph, a company named Rodenstock was noted as the subject of a landmark legal decision allowing German businesses to come to London in order to shed debts.

The High Court authorized an arrangement in which this major German eyeglass manufacturer could improve its financial situation by traveling to England. Quite a nice deal for a company saddled with €305.3 million in debt.

Rodenstock is headquartered in Munich but also has factories in Europe and Thailand. Customers in the UK provide under two percent of company revenue. The new Scheme of Arrangement allows companies to avoid insolvency through new loans and debt-for-equity swapping.

Since the Rodenstock loans were made under English laws, the company was deemed to fall within English jurisdiction.

Law firm Kirkland & Ellis represented Rodenstock during its restructuring. Earlier in 2011, the firm announced that Rodenstock would receive €40 million worth of new loans.

In addition, Bridgepoint will turn over 49 percent of its interest in Rodenstock to the banks involved in the restructuring. Rodenstock UK General Manager Dietmar Rathbauer stated that the refinancing would help the Rodenstock Group continue with its growth strategy spanning the next five years.

With its financial troubles handled, Rodenstock Group is now able to focus on product development, customer satisfaction, and operations, said Mr. Rathbauer. He also reported that Rodenstock UK would continue its investment in its production facility within the UK. The company plans to add products and services in the coming years.

A Scheme of Arrangement like this puts all foreign-headquartered companies with UK facilities on notice. If they get themselves into trouble financially, they can always just take loans under English law and appeal to the High Court for consideration under English jurisdiction.

One wonders how long this can go on until the UK becomes a business debt refugee camp.

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