It has been almost a decade since there was a lot of buzz around small business bonds called midsize bonds. A short boom quickly ended in high failure rates. At the time, the headlines were among other things the bankruptcies of the “dream ship” MS Deutschland and the Wismar fuel manufacturer German Pellets. Often there were inconsistencies behind this, but above all the bonds were often enough the (temporary) rescue from insolvency. "The issuers all came to us first," says the manager of a fund that grants direct loans: "We refused because it was too risky for us."
In the wake of the Corona crisis, some companies have now got into existential crises again. The latest case is the project developer Eyemaxx, originally known for its specialization in retail parks. On Thursday, the company announced that after talks with investors did not provide a short-term solution, an application for restructuring proceedings had been submitted to the competent court.
It didn't come as a surprise. Because just ten days earlier, Eyemaxx had just announced that they did not have the necessary financial resources to make an interest payment due on October 26 on time. The cause are not received payment inflows from project sales "as well as their failed refinancing". Insolvency law experts had already prophesied the application for the current point in time, because this had to be submitted no later than three weeks before the foreseeable occurrence of the insolvency. The shortage of funds did not come as a surprise either. In March, Eyemaxx asked the creditors of three bonds, one of which was only issued in July 2020, to agree that a certain level of equity capital had to be adhered to because it was linked to a special right of termination.
The background was a forecast loss of 26 to 28 million euros with sales of 5.5 million in the past financial year - although Eyemaxx had assumed an equity ratio of more than 20 percent when it was announced, which would have been sufficient. A report from another medium-sized bond issuer, the construction supplier VST Building Technologies, which protested against corresponding suspicions after the insolvency of two subsidiaries, also caught attention. Both companies are closely linked not only in terms of personnel through the Eyemaxx executive board and VST supervisory board chairman Michael Müller.
Eyemaxx is not the only company from the ranks of former SME emitters that got into trouble during the Corona crisis. The pneumatic nailer manufacturer J. F. Behrens had to file for bankruptcy a good year ago. In the meantime, the company's business from the Hamburg area has largely been sold. The creditors should be able to expect an exceptionally high insolvency rate of between 40 and 65 percent and receive an advance payment before the end of the year. The fashion manufacturer Eterna has also been involved in the proceedings under the new StaRUG restructuring law since September. Here the bondholders have already waived 87.5 percent of their claims.
There is great distrust of Eyemaxx among investors.
For example, the sale of shares by company boss Müller has come under fire.
There are also complaints about the lack of transparency and the suspicion that the relocation of insolvency proceedings to Austria will reduce the obligations towards investors.