DOMO Chemicals’ German sites told they can continue operating at a minimal level for now. The state of Saxony-Anhalt has granted the continued operation of the production facilities in Leuna on public safety grounds. For now, an immediate shutdown of operations is off the table.
DOMO Chemicals
DOMO Chemicals ordered to continue operation amidst insolvency talks
The decision was made because a safe shutdown of the Leuna production facilities couldn’t be implemented with the current weather conditions. To prevent risks to human health and the environment, operations must continue, with only the current operators able to prevent such hazards. The state has ordered a “substitute performance” (Ersatzvornahme) to avert the risks associated with an uncontrolled shutdown. This doesn’t affect the existing obligations of DOMO Caproleuna GmbH.
“It is very good news that the state has enabled continued production – albeit at reduced capacity – for the time being,” said Prof. Dr Lucas F. Flöther, Court-Appointed Preliminary Insolvency Administrator from the Law Firm Flöther & Wissing. “What this means for the further course of the insolvency proceedings remains to be seen. What is clear, however, is that we have gained valuable time to examine whether and under what conditions a long-term stabilisation might be feasible.”
The insolvency proceedings affect the following three German subsidiaries:
- DOMO Chemicals GmbH (Leuna, approx. 35 employees).
- DOMO Caproleuna GmbH (Leuna, approx. 480 employees).
- DOMO Engineering Plastics GmbH (Premnitz, approx. 70 employees).
The subsidiaries filed for insolvency on the 25th of December. Last week, the operational situation deteriorated further. In order to ensure the safety of production processes, a constant supply of energy, certain gases, and cooling agents like liquid nitrogen is required. With the companies’ lack of funds, there was a risk that deliveries could stop.
Negotiations last Thursday between creditors and the shareholder regarding the required funds failed. This led to Saxony-Anhalt’s Minister of Economic Affairs, Sven Schulze, bringing together all key stakeholders in Leuna on Monday to find a solution. Participants in said meeting included:
- The management board.
- The works council.
- Representatives from the trade union IGBCE.
- Infraleuna.
However, the creditors couldn’t be persuaded to compromise, which led to the State stepping in.
