Four weeks of insolvency are roughly over and I thought I’d give an update, even though there aren’t really any significant updates... Back then, I looked to see if I could find any information about other insolvencies and the timeline that might await me, and wasn’t really successful. But then maybe it’s nice to give an update now and then on how things look for us. I mean, basically it’s probably true that every insolvency proceeds a bit differently, but whatever.
Before the insolvency filing: When I read online, you often read that it’s often already noticeable for some time, e.g., nothing happens anymore at the construction site or something similar. I have to say, that was not the case with us at all. Yeah, it was a bit quieter over Christmas and, for example, the neighbors in the semi-detached house were a bit worried because their screed was delayed a bit. But generally both before Christmas in December and January until the insolvency filing, work on our construction site proceeded as usual. Especially the days right before the insolvency were really busy. The tile work in the show house was finished and they were supposed to start on the other houses now (we actually have four rows of tiles laying in one room....). Interior plaster was applied, the painters were currently in the show house, and we had talks with the special requests department about whether we still wanted other colors somewhere... So nothing like “it was already announced.”
After the insolvency filing on 10.01., there was a bit of panic among everyone at first. I don’t even know how to organize this here in the post. Basically, we first got a circular informing us about the insolvency. It also said that it is intended to continue all projects. Our WhatsApp group grew from 4 to 5 parties (if there are any other Castrop-Rauxel residents, feel free to get in touch) and somehow everyone started to gather info and assessments to the extent each could and we tried to keep each other up to date. Meanwhile, we saw that the subs all left the construction site and took their stuff, and where you could still see people in the very first days, within a few days everything on the construction site came to a standstill. Neighbors were still able to talk to a few subs and the mood is mostly terrible (especially for those who had just issued invoices shortly before insolvency that were not paid anymore—so especially those who had pushed the show house and were actually supposed to come to us next—yay).
What has happened at the construction site since then? Well, as far as we can see, almost nothing. In the first days we raised concerns in the group about securing the construction site. That was the time when it rained a lot and water in the basement had already been a problem sometimes before (even though a lot of work on the drainage was done in the last days before insolvency). The site manager from Tecklenburg came by once more and locked the houses and closed the lock on the construction fence. Coincidentally, we caught him right then and could briefly talk to him, but effectively they still didn’t know how things would go on (they wanted to connect a pipe of the drainage somewhere themselves). Since then, apparently someone ventilates now and then (could also be daily, no idea. That’s just what a future neighbor occasionally sees), otherwise it seems effectively at a standstill.
The first week: It quickly became clear that we first have to wait and see what the insolvency administrator intends. We roughly understand how the initial phase of an insolvency proceeding usually works (there is a preliminary insolvency administrator and within a few months—don’t hold me to it, probably three or so—the “real” procedure is opened). Our understanding is that all financial approvals now have to go through the insolvency administrator. We see from press articles and reports that he is “confident,” because “the corporate group is able to continue and complete all ongoing construction projects.” While we ourselves obtain further assessments (more on that shortly), we decided to let a few days pass before contacting Tecklenburg or the insolvency administrator. I think we all learned a lot during that time, but I can’t document all of that. There were also things like in insolvency the Tecklenburg salaries are paid for three months by the authorities (which might provide some financial leeway). What roughly constitutes an insolvency estate and that insolvency doesn’t necessarily mean business closure, and so on.
Official info. On 19.01. we received a letter (from the insolvency administrator, sent via Tecklenburg), which actually seems more intended for the subs. It repeated the info: “It is intended to complete all started construction projects, the undersigned is already in talks with the financing banks.” That the construction sites are inventoried and that for future goods deliveries there must be an approval signed by the insolvency administrator. And that the actual procedure is to be opened on 01.04. and that from then on open claims can be registered. We initially interpreted this positively, that basically work can continue with an approval if the subs agree. On 21.01. we then received a similar letter (with a slightly different focus), which was probably really aimed at us. Again, that it is intended to finish all construction projects, that bank talks are ongoing as well as an inventory and valuation, which will still take some time. And that we should refrain from sending inquiries to the insolvency administrator, as he cannot answer them due to the number of cases, but to contact our Tecklenburg contact persons if there are questions.
Assessments. Initial assessments from people who know more than us (but who are not directly involved) were actually not that negative. Yes, we should expect delays. But there was even speculation that the insolvency administrator might try to finish our project before 01.04. with the funds currently available, because it’s already quite far along. (aka increasing the insolvency estate and having fewer parties on board who need to be paid off during the procedure). Also because he possibly has more funds available now through the savings on the TB salaries. And anyway, maybe the insolvency is more pro forma (aka “there’s a bill due in three weeks that can’t be paid, that’s why insolvency, but in four weeks money would arrive”)... Well, I’d say since still exactly zero has happened at the construction site, that seems pretty unlikely. About “what actually happens with our contract”... Basically, the contracts continue to apply, unless the administrator says otherwise. So we can’t just start commissioning things on our own accord (apart from the fact that even accessing the site is questionable. We also don’t have money to pay twice in the worst case). So for now, we are in a waiting position and have to see what the administrator decides.
There were also a few assessments on what this means for the subs. There was a lot in the direction of “they surely know this already and can handle it.” Aka, apparently, you can insure against outages (and Creditreform’s assessments for Tecklenburg before the insolvency were not wrong that this would have been possible... haha) and whoever has that won’t have huge losses. And from now on, an approval from the insolvency administrator is the best security and there is little reason not to continue working. Well, at least from one or two conversations we gathered that not all subs are necessarily that experienced with insolvency and it likely hits some quite hard.
Basically, after not hearing anything for a while, last week we asked Tecklenburg if talks with the subs regarding approvals are taking place now or if they can give us a general update. I’d say it doesn’t sound like it will continue tomorrow... Apparently talks between the banks and the insolvency administrator are still ongoing (as already stated in the letters from 19.01.), “so that they can then proceed to approach our craftsmen.” And a few craftsmen have already signaled willingness to talk, which would be deepened only after the bank’s decision. (And then many apologies.) I actually hoped that the funds might suffice to allow these talks to happen in parallel and not have everything lie fallow in the meantime, but currently doesn’t sound like that. To me it sounds like the insolvency administrator is looking for an overall solution in the course of the bank and investor talks to allow everything to continue everywhere.
And now? Well, same as before. We remain in waiting mode. We exchange info with the neighbors. We wrote to the notary again about a few contract clauses to better understand them in the current context—let’s see if that yields anything. Among other things, we’re trying to understand what happens to the deadlines in the contract in the context of insolvency and what rights we might have. We try to understand what happens with the warranty if the project is completed and what options there might be. We also try a bit to understand what happens if it is decided not to continue our project (there are apparently variants such as the contracts are split so that ownership transfer can happen in the current condition, blah blah). But that the project will not be continued is currently rather unlikely based on all info and assessments we have received, so that falls more in the “just in case” category that we want to understand a bit. Of course, we are worried that even if it goes on sometime, it might be done shoddily.
Sorry, this turned out to be a pretty long post.
TLDR: Since insolvency, there is a standstill at the construction site. Contracts remain valid for now. Projects are supposed to be continued. We are waiting to see what the insolvency administrator will do, who is currently apparently mainly conducting talks with banks and investors.