What happens next for the 3,670 employees affected by the impending insolvency of the motorcycle manufacturer KTM and two subsidiaries? They are worried about their jobs, and from Monday there will be company meetings with experts from the Chamber of Labor.
KTM no longer pays the salaries and wages for November as well as the Christmas bonus. Until the restructuring process is opened, it is not legally possible for KTM to pay this out, says spokesman Hans Lang. There is no comment on whether this will benefit the ailing company.
More on the topic
Business KTM: From bankruptcy in 1991 to bankruptcy in 2024
The insolvency remuneration fund will step in and the employees will get the money from there. According to the Chamber of Labor, the processing will take at least a month. So the Christmas bonus comes after Christmas.
Criticism of the union
Wolfgang Gerstmayr, managing director of the GPA union, emphasized on Wednesday that the fund is financed from additional wage costs and criticized: “KTM boss Stefan Pierer, of all people, has repeatedly raised the mood against additional wage costs in the past. Now the public sector should step in for his company , although serious management errors are most likely responsible for this situation.”
Things are different when it comes to December wages and salaries. KTM will pay this again – not at the end of December, but next week, i.e. in the first week of December. The aim is to “soften hardship cases,” says Lang.
From January, wages and salaries should be paid as normal or to the extent of the 30 hours to which working hours are reduced (internal short-time work). As reported, up to 300 additional jobs are to be cut. What other measures are to be taken will ultimately be included in the restructuring plan, which KTM must agree on with the creditors within 90 days.
Critical voices accuse KTM of having paid out a dividend in April. It was 50 cents per share. The year before it was two euros. The payout ratio fell from around 40 to 21 percent. Lang defends the dividend: “It was paid out for the past financial year and was significantly reduced despite the record year of 2023 because it was foreseeable that 2024 would be more demanding.” However, the slump in sales of this magnitude was not to be expected.
When asked how much of the bankruptcy was due to adverse circumstances and how much was due to management errors, Lang said: “A lot has been done right in recent years, but not everything.” He points to external factors: personnel costs have increased by 125 million euros within three years. “And this for a company that has a 96 percent export quota.”
What steps can KTM take to regain the trust of their employees and investors during this restructuring process?
## Interview: KTM’s Fight for Survival
**Host:** Today we’re joined by [Guest Name], an expert in restructuring and employment law, to discuss the ongoing situation at KTM, the motorcycle manufacturer that’s facing a serious financial crisis.
**[Guest Name]:** Thank you for having me.
**Host:** KTM announced it’s entering a restructuring process to avoid insolvency, meaning thousands of jobs are at risk. This news has understandably caused anxiety among the 3,670 employees. Let’s start with the immediate impact on the workforce. November salaries and the Christmas bonus are being withheld, can you explain the legal reasons behind this?
**[Guest Name]:** Yes, this is a common practice during insolvency proceedings. Until the restructuring process is legally opened, KTM is unable to make these payments which are considered contingent liabilities.
**Host:** But what about the employees who are depending on this income, especially during the holiday season?
**[Guest Name]:** I understand those concerns. Thankfully, the insolvency remuneration fund will step in to cover those wages, but there will be a delay of at least a month. The employees will receive this backpay, but unfortunately not before Christmas.
**Host:** This situation has sparked criticism from the GPA union. They’re accusing KTM’s management of mismanaging the company’s finances, citing the payment of dividends earlier this year. What do you make of these claims?
**[Guest Name]:** These are serious allegations. While KTM líquida claims that the dividend payment was tied to the previous year’s record profits and a forecast of a more challenging 2024, the union’s concerns about potential financial mismanagement are understandable given the current circumstances. It’ll be interesting to see what the juryconcluded within the restructuring process.
**Host:** As KTM works on a restructuring plan with its creditors, what does the future hold for these employees?
**[Guest Name]:** The next few months will be crucial. The plan may involve job cuts, reduced working hours, and salary adjustments. It’s a difficult situation, but hopefully the restructuring process will allow KTM to create a sustainable business model for the future.
**Host:** Looking ahead, what are your thoughts on KTM’s ability to overcome this challenge?
**[Guest Name]:** It’s going to be tough, but KTM is a well-known brand with a dedicated customer base. However, the company will need to demonstrate a convincing restructuring plan to its creditors and regain the trust of employees and investors.
**Host:** Thank you for your insights. This is a developing situation, and we will continue to follow closely.