In a dramatic turn for the Austrian motorcycle manufacturer KTM AG, it has come to light that the company’s debt has risen to €2.2 billion during ongoing insolvency proceedings. The proceedings, involving KTM AG and its subsidiaries, were addressed in a court hearing on Friday, where insolvency administrator Peter Vogl presented his third report.

The numbers tell a troubling story: 3,534 claims have been filed against KTM AG, including 2,347 from employees and 1,187 from other creditors. Of the total €2.18 billion in claims, only €1.66 billion has been verified so far.

The situation is similar for KTM’s subsidiaries. KTM Components GmbH faces 739 claims totaling nearly €81 million, with €48.8 million recognized. Meanwhile, KTM Forschungs und Entwicklungs GmbH has received 1,162 claims amounting to €112 million, of which €41.4 million has been validated. The Alpine Creditors Association (AKV) disclosed these figures in its latest report.

Major Debt and Leadership Shake-Up

A significant part of KTM’s financial woes stems from debts owed to banks, with €1.7 billion attributed to financial creditors. Mounting pressure from these creditors has already led to a leadership shake-up. Stefan Pierer, who had served as CEO, stepped down and was replaced by Gottfried Neumeister. However, Pierer remains involved as co-CEO.

Investors in Sight

To steer through this financial chaos, KTM has enlisted Citigroup Global Markets AG to secure fresh investment. According to Friday’s updates, 23 potential investors—ranging from strategic to financial backers—are currently exploring opportunities to support the company.

Karl-Heinz Goetze, head of the Credit Protection Association of 1870, emphasized the importance of securing an investor to preserve the business and protect regional jobs. “From a creditor's perspective, keeping the company alive and attracting investment is the only logical solution,” he said. “Shutting down would result in far greater losses for creditors and devastate the region economically.”

Restructuring Plan Offers Hope

KTM’s restructuring plan proposes a repayment rate of 30% for creditors, with payments to be made over the next two years. Encouragingly, initial feedback from potential investors has been positive, signaling cautious optimism.

Production Resumes Amid Downsizing

The insolvency forced KTM to pause production at its Mattighofen headquarters in mid-December due to rising inventory levels. However, plans are now in place to gradually restart operations beginning 17 March.

The company has also undergone a significant workforce reduction. At the end of 2023, KTM employed 6,000 people, but this figure has since dropped to 4,400, with 2,000 of those contracts tied to KTM AG itself. Fortunately, no further layoffs are currently planned.

Key Dates on the Horizon

All eyes are now on 25 February, when creditors will negotiate KTM’s proposed restructuring plan. The financial backing of investors is expected to ensure creditors receive the legally mandated minimum repayment rate of 30%—if not more.