Investor withdrawal puts Baiersbronn Frischfaser Karton at risk
Baiersbronn Frischfaser Karton, the German producer of virgin fiber folding boxboard that filed for insolvency in June, is facing increased uncertainty after a potential investor withdrew from the financing process. Since the insolvency filing, operations at the Baiersbronn mill have continued without interruption. Pre-financing of insolvency benefits was successfully implemented, securing wages and salaries for the company’s approximately 220 employees.
The mill, located in Baiersbronn, Germany, has an annual production capacity of around 95,000 tonnes of virgin fiber cartonboard. Jan Markus Plathner of Brinkmann & Partner is acting as provisional insolvency administrator. According to the law firm, continuing operations independently once formal insolvency proceedings begin would not be viable because the company would again have to bear its full cost structure, while its ability to increase selling prices remains limited.
“Continuing operations independently after the start of insolvency proceedings is not possible due to the reinstated full cost burden and limited price increase options. This limits the remaining timeframe for successfully completing the investor process. Should the ongoing transaction process not be successfully concluded in time, business operations must cease upon the commencement of insolvency proceedings,” Brinkmann & Partner explained.
High energy costs and overcapacity weigh on the business
The company has been operating under significant financial pressure, reflecting broader challenges affecting the European cartonboard sector. According to Brinkmann & Partner, persistently high energy costs, structural overcapacity and difficult market conditions have all contributed to the deterioration of the company’s financial position.
Despite cost-cutting measures, the mill was unable to stabilise its liquidity on a sustainable basis. “Like many producers in the European cardboard industry, the company is under considerable economic pressure due to persistently high energy costs, structural overcapacity, and a challenging market environment. Despite operational cost-cutting measures, the liquidity situation could not be sustainably stabilized,” the firm said.
Brinkmann & Partner also pointed to the additional burden created by the cost of complying with the EU Emissions Trading System. “In addition to the massively increased energy costs, the obligations to surrender emission allowances under the CO2 emissions trading scheme are placing a considerable burden on the company,” the firm added.
The withdrawal of the potential investor has therefore reduced the time available to secure an alternative solution. Unless the ongoing investor process leads to a successful transaction before formal insolvency proceedings begin, the Baiersbronn mill could be forced to cease operations.
