German kitchen brand Rational has submitted an application to open insolvency proceedings for its assets, in a move that was revealed in a shock announcement on 16th September. The manufacturer, which is based in Melle and exports to over 50 countries, said that its situation has been exacerbated by a problem with its server system, which was triggered by a local power outage at the start of the month.
The production of new kitchens is currently on hold due to the total failure of critical parts of the server systems used to control kitchen design and manufacturing as well as other key company processes following the power outage. This is said to have caused considerable damage to the IT servers and irreparable data loss, as the emergency power supply failed at the same time because of technical defects.
This all means that the company is not currently able to accept new orders or forward information on existing orders to the production operation. The company said that a comprehensive examination by the IT department and external specialist firms has found it is not technically possible to recover the data in the short term at least, so it cannot say with any certainty when kitchen production may resume. Management filed an application with the Local Court of Osnabrück for insolvency proceedings to be opened due to the unavoidable loss of sales and associated imminent illiquidity.
The company employs 64 people, who were informed on site about the situation on Friday. Employees' wages and salaries have been paid up to August 2022 inclusive. In an announcement released to the press, Rational said that over the coming days, every effort will initially have to be made to provide comprehensive and transparent information on the situation to those involved and to find the best possible solutions for all orders that have previously been received but which the company is not in a position to process at this time on account of the irreparable data loss. The provisional insolvency administrator will apply to the Federal Employment Agency for approval of pre-financing of the substitute benefits provided under German insolvency law.
The company said that 'despite the very critical situation for all involved in the proceedings, the firm intention is to preserve the business, avoid liquidation and, as quickly as possible, find a solution that will keep the company going. To this end, the provisional insolvency administrator will also initiate an open M&A process, which is intended to not only motivate the current owners but also encourage all suitable domestic and international strategic investors as well as interested financial investors to take over the company in spite of the very difficult situation and guide it towards a good and stable future'.
"We are doing all we can to stabilise the business – an enormous challenge given the extremely exceptional circumstances. We will also work with the management team and the excellent and highly skilled workforce on ways of resolving this situation as quickly as possible so that a long-term solution can be found for this established company following this unavoidable interruption to distribution, design, production and sales,” said provisional insolvency administrator Stefan Meyer from PLUTA.
Mano Bakhtiari, MD of Rational Einbauküchen Solutions GmbH, said: “We have tried everything to resolve the IT issues over the past two weeks. Unfortunately, this has proven technically impossible in the short term. Filing for insolvency was therefore unavoidable. This situation is extremely stressful for all involved, especially customers and employees. But we will do everything we can to find solutions for our company together with the provisional insolvency administrator. We are in contact with our customers and will keep them informed of developments.”