Advising insolvency administrator on transfer of DOMO Caproleuna to rescue vehicle

Going forward, the company will operate under the name LEUNA-Polyamid GmbH. The acquiring entity is taking over the operations and the real estate in Leuna as well as 436 of the most recently approximately 500 employees. The insolvency administrator reached an agreement with the works council on a reconciliation of interests including a social compensation plan. 

The three German subsidiaries of the DOMO Chemicals group filed for insolvency on December 25 after financing discussions with their lenders had failed. Due to significant safety and environmental risks, a short-term shutdown of the production facilities in Leuna could not have been carried out responsibly. The State of Saxony-Anhalt therefore ordered a temporary emergency operation, which enabled the plant to continue operating until the investor solution was implemented. In the meantime, the competent insolvency court has opened insolvency proceedings over the three German entities.

The restructuring is set against the backdrop of years of strain in the chemical industry – a situation further exacerbated most recently by high energy prices, structural overcapacity and increasing competitive pressure, among other factors. In light of this, various investor and rescue solutions were evaluated in order to limit  the negative impact on employees, the Leuna production site and the closely interconnected chemical cluster as far as possible.

DOMO Caproleuna GmbH manufactures basic organic products (e.g., caprolactam, phenol, acetone) and polyamide 6 as its main product, also known as nylon 6. Polyamide 6 is a versatile engineering plastic characterized by high strength, good toughness and excellent processability. It is used in the production of lightweight, durable and high-performance components, in particular for the automotive industry, the electrical and electronics sector and high-quality consumer goods.

DOMO Chemicals is a Belgium-based chemical company with a global presence and is one of the leading suppliers of nylon and polyamide materials used primarily in the automotive, electrical, construction and consumer goods industries. The German entities are part of an integrated European production network and play a central role within the regional chemical cluster, particularly at the historic Leuna site in Saxony-Anhalt.

The A&O Shearman team was led by partners Dr. Josef Parzinger (Restructuring/Banking & Finance) and Dr. Hendrik Röhricht (Private Equity/M&A, both Munich) and additionally comprised partners Dr. Udo H. Olgemöller (Public Law), Peter Wehner (Employment), Dr. Heike Weber (Tax, all Frankfurt) and Dr. Christian Hilmes (Real Estate, Hamburg) as well as counsel Dr. Daniel Bolm (Real Estate) and Dr. Ioannis Thanos (Antitrust, both Hamburg). The team also included senior associates Dr. Veronika Gaile (Corporate/M&A), Stephan Bühner (Public Law), Dr. Sven Gunkel (Employment), Felix Fitschen (Real Estate Finance, all Frankfurt) and Anna Kräling (IP/IT, Düsseldorf) as well as associates Clara Wrede, Eric Bremer (both Restructuring/Banking & Finance), Benedikt Wagner, Antonia Waltz, Sebastian Gerstner (all Corporate/M&A, all Munich), Daniel Lenz, Dr. Lukas Klug, Johann Hornberg (all Corporate/M&A), Sarah Weber, Janina Müller (both Public Law), Dr. Jan Henrich (Employment) and Sven Lücke (Real Estate Finance, all Frankfurt).