German car mirror maker Schefenacker has moved its corporate headquarters to the UK, to escape German bankruptcy laws.
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According to the Daily Telegraph, Schefenacker will now be able to negotiate a deal with creditors on EUR430m of debt under UK laws. Under German laws Schefenacker would have been forced into bankruptcy because third quarter results breached the terms of a bond covenant.
Schefenacker acquired too much debt following its takeover of UK mirror manufacturer Britax Vision Systems, in 2000. German banks reportedly sold off most of their loans to UK hedge funds and institutions and 90%of creditors are now based in London, said the report.
In a statement the company said the move will allow the company to implement a financial restructuring of Schefenacker without affecting day-to-day operations.
The Daily Telegraph said that Schefenacker is being closely watched and that if it is successful it could pave the way for a new niche in the City of London as a market for ‘jurisdiction shopping’ by foreign companies.
Chief executive Reiner Beuteul told the newspaper that “the UK hedge funds are real risk professionals. You can talk to these guys, unlike the regional German banks who just panic.”
