Germany’s FSG Shipbuilder Forced into Contentious Insolvency Process

The embattled German shipbuilding group FSG-Nobiskrug Holding along with its two shipyards and its design group have been provisionally declared insolvent by a German court due to a filing by an insurance company. Investor Lars Windhorst, who has controlled the group since a prior insolvency filing in 2020, is vowing to fight the proceeding and use it as an opportunity to reorganize the group.

The Flensburg District Court today, December 12, accepted the filing made by a health insurance company starting the insolvency process. The court named two prominent German lawyers, Christoph Morgen and Hendrik Gittermann, both well-known in restructuring cases as provisional insolvency administrators to oversee the operations, but investor Lars Windhorst remains registered as the managing director of the company. Morgen led the 2020 reorganization of FSG and the 2022 liquidation and sale of Genting Hong Kong’s MV Werften shipyard group. The insolvency hearing for the FSG group is scheduled for February 2025.

Lars Windhorst took control of Flensburger Schiffbau Gesellschaft (FSG) in 2020 and promised a revival of the shipyard which traces its origins to 1872. The yard had encountered financial difficulties prior to the COVID-19 pandemic as it became involved in disputes with shipowners including SIEM Europe, TT-Line, and Brittany Ferries which led to the cancellation of contracts. The operation however turned around and in 2021 reported it had received new orders.

The group consists of the FSG yard in Flensburg as well as the Nobiskrug Yachts yard in Rendsburg and FSG-Nobiskrug Design. The three operating companies as well as the parent company were all included in the insolvency filing.

Windhorst has been unpopular with the works council and the unions as well as local elected officials who have called for him to step down and sell the companies. Christoph Morgen speaking to the media described his initial findings as “frightening” while calling management “irresponsible” according to the media out NDR. Gittermann said there are interested parties and that the priorities would be to set up bank financing and find an investor to continue the operations.

The possibility has been raised of federal and state governments providing interim support to finance the operations. There have already been discussions in the legislatures about the status of the company and today Federal Minister of Economics Robert Habeck said the government would support the search for potential investors.

Media reports indicated a possible insolvency had been started against the design group months ago but had not proceeded. Workers reportedly have only received partial pay in October and November despite a promise that all the overdue monies and Christmas bonuses would be paid by the beginning of December. Rent on the properties is also reported to be overdue since February.

Last week, the union IG Metall and the company’s works council began organizing protest demonstrations over the back pay. The union had said it would start daily demonstrations until the monies were paid. There are approximately 340 employees in Flensburg and 160 in Rendsburg.

Windhorst is barred from making decisions about the company without consulting the provisional administrators. He however told the media he was committed to preserving and restructuring the operations. He said the filing would serve as a catalyst for the public discussions about restructuring the shipyards.

Windhorst and his investment company Tennor however have been at odds with the government. Media reports indicate the Federal Ministry of Economics last summer withdrew funding for the construction of LNG bunker ships citing a lack of cooperation from Windhorst. A local government spokesperson told NDR, “Windhorst and Schleswig-Holstein are not a good fit.” They said the goal is to complete an orderly transfer of the shipyards and provide security for the employees.