Varta files for insolvency under standard proceedings – breakup of battery manufacturer considered likely

"To simplify processes and reduce bureaucratic hurdles," standard insolvency proceedings had been applied for the parent company and the button cell subsidiary. The interconnections within the group were so extensive that a restructuring would be facilitated by a unified proceeding, it was said. Previously, Varta had filed for self-administered insolvency on Friday. Decision-making authority now lies entirely with the insolvency administrator; CEO Michael Ostermann, who formally has little left to say, is to remain on board.

Causes of the crisis

As causes of the crisis, the company cited "significantly worsened market conditions, weaker demand, negative currency effects, and most recently the decision of a key customer to end the collaboration." According to consistent reports, the key customer in question is Apple: the US tech giant will in future source the rechargeable "CoinPower" button cells for its AirPods headphones from China rather than from the Varta plant in Nördlingen, Bavaria, which had been massively expanded only a few years ago.

Varta had already filed for insolvency on Friday after Austrian investor Michael Tojner and sports car manufacturer Porsche, which holds the other 50 percent, were no longer willing to inject fresh funds. Tojner also holds 50 percent of the company. Without fresh capital from the two owners, self-administration could no longer be sustained.

Breakup likely

Meanwhile, a breakup of the group is becoming apparent. "An einer Zerschlagung des Unternehmens führe aber wohl kein Weg vorbei", according to company circles. The profitable household batteries subsidiary Varta Consumer Batteries is to be kept out of insolvency and is to go to the creditors, including Deutsche Bank and several hedge funds, to which it was already pledged.

Wahl stressed that the goal remains a long-term and viable solution. "Unser Ziel bleibt eine langfristige und tragfähige Lösung." What this solution might look like in concrete terms is currently unclear. Negotiations with creditors and potential investors are likely to intensify in the coming weeks.

Uncertain future for the sites

With the switch to standard insolvency proceedings, management largely loses its ability to act. Although Ostermann formally remains in office, key decisions – from investments and contract terminations to the sale of business units – now lie with Wahl. This increases the pressure to quickly find a solution for the individual business areas.

The sites in Ellwangen and Nördlingen face an uncertain future. While the household batteries division is expected to go to the existing creditors, no buyer has yet emerged for the Microbattery division and the parent company. Varta most recently employed several thousand staff members; the company has not yet provided any information about possible job cuts or site closures.

Observers see the step as an admission that an orderly restructuring under its own proceedings is no longer realistic. The interconnections within the group would have required a quick, unified solution that standard proceedings could offer more readily than self-administered insolvency. Which parts of the company ultimately survive will now depend above all on the negotiations with creditors.