Germany: Saxony-Anhalt will not support Sovello31. July 2012 | Industry & Suppliers, Markets & Trends | By: Sandra Enkhardt/Shamsiah Ali-Oettinger
German state Saxony Anhalt will not provide any support for the insolvent Sovello. The state's Economics Ministry accuses the company of not having a viable sustainable business concept in place.
Under EU law, the required aid from the state is not possible, according to the ministry. Saxony Anhalt's minister Reiner Haseloff also expressed his disappointment with the lack of a sustainable business plan.
Furthermore, the idea of potential Chinese investors has been rejected. The state ministry said the development model with a potential Chinese investor in the form of a joint-venture cannot be supported, as the state would be required to accept a full waiver of the claims. The company, nevertheless, continues to look for investors. The formal insolvency proceedings are to be opened on Wednesday. Sovello filed for insolvency in May. The state would need to help finance direct or indirect financial shortfalls after insolvency opening.
Moreover, the transfer costs for approximately 550 employees also needs to be carried by the state. Local newspaper "Handelsblatt" reported that Sovello has expressed the willingness to continue employing about half of its workforce, about 1,000 employees and the other half are expected to be transferred to other companies.
Sovello has reacted to the ministry's decision by saying they want to end the investor process by end of August. This is the "most economical situation in the interest of creditors," says Reiner Beutel, chairman of the board. Beutel elaborates that the interest of investors from Asia remains "very high".
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