It seems like July may be bankruptcy season in Germany following filings for insolvency by BBS, Recaro, and now Fanatec. The global sim racing giant has been racking up some serious debts in recent years, to the tune of 95 million Euro. The company was pushed into a restructuring with strategic investment bridge financing from a firm called Corsair. The CEO and majority shareholder attempted to forego the restructuring, though didn’t have a viable backup plan, and was pushed out. According to a release from Endor AG, Corsair halted payments because “the ongoing disruptions made a reorganization under [German law] impossible.”
It seems that without the CEO and majority shareholder onboard, the company will simply fall into insolvency and will be taken over by the reorganizing company. Corsair, it is believed, will purchase the company out of receivership (presumably at a significantly reduced price). It was seemingly a money play for Corsair to buy the company after it failed than continue to loan money to the deeply debt-laden company.
Andres Ruff, CEO of Endor, said: “We would like to thank our customers, employees and business partners for their trust and support over the past months. As part of the insolvency proceedings, we will continue the restructuring and work at full speed to reorganize the company. We are confident that we will emerge stronger from this situation and return to a sustainable, profitable growth path.”
Endor took on significant debt during its 2020 growth to meet increased global demand during the pandemic. Like many companies who experienced significant growth as a result of isolated customers and a desire to escape during the Coronavirus epidemic, once the peak demand began to wane, it was overleveraged. The company currently owes 95 million Euros against its annual sales of 100 million euros.
Endor AG says it will continue its business operations during the insolvency proceedings. Sales, warranty, and repair services will continue unabated, and customers will continue to receive driver and software updates. As a former Fanatec customer, I can tell you that service wasn’t Endor’s strong suit before the bankruptcy, so prepare to wait and be frustrated.