Word: kirche
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Dates: during 2000-2009
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...Germany, debtors were locked up in a tower in the center of town, so their neighbors could witness their disgrace. More recently, executives declaring bankruptcy traditionally wore a black suit symbolizing the death of their firm. Following the insolvency declaration by the German broadcaster KirchMedia last week, founder Leo Kirch failed to show up for work for the first time in living memory. But thanks to a 1999 revision of the bankruptcy law there was a chance that the company could emerge from bankruptcy relatively intact, unlike many previous failures that were shuttered and sold. "It's a turning point...
...Maybe. Kirch's empire, of which KirchMedia is only a part, is foundering under debts of $5.7 billion. Its creditors include some of Germany's biggest banks as well as foreign media empires, such as Rupert Murdoch's News Corp. and Italian Prime Minister Silvio Berlusconi's Mediaset. The law gives new management 90 days to come up with an operating plan under "self-administration," similar to the Chapter 11 bankruptcy provisions in the U.S. "There are more possibilities to save the firm than under the old law," says attorney Peter Neu, who specializes in bankruptcies. "They don't have...
...could be a tough slog for Kirch's new chief executives, Wolfgang van Betteray, an insolvency specialist, and Hans-Joachim Ziems, a Kirch adviser. "My experience is that they will never get all the creditors behind such a complicated insolvency plan," said Wolfgang Petereit, a bankruptcy expert in Mainz. "The commercial interests of the creditor groups are totally different." What's worse, the new law requires companies emerging from bankruptcy to keep all the employees on the payroll and honor existing employment contracts, which scares off many potential investors. Complicating matters in Kirch's case is the company's opaque...
...Kirch, 75 and partially blind as a result of diabetes, finally stopped his wheeling and dealing last week. He sent a letter to employees thanking them for their loyalty. "I would have liked to stand and care for our company and your future," Kirch wrote. "But the leadership was taken out of my hands." Germany's largest bankruptcy since World War II marked an ignominious end for Kirch, who began his career in 1956 by borrowing DM 25,000 from his wife's family to buy the rights to Federico Fellini's La Strada. By the end, Kirch had amassed...
...Kirch's downfall was largely the result of a calamitous investment in pay television, betting that German consumers would shell out to have a choice of first-run movies and prime-time soccer available through a digital set-top service called Premiere. But the profusion of private and public broadcasting available in Germany made the service a hard sell. Kirch managed to sign up 2.4 million subscribers; the breakeven point was 4 million. The company was losing more than $2 million a day, and he borrowed heavily to keep it running. Kirch also offered investors a "put option" - a promise...