Palmers facing bankruptcy?

Corona loan “should never have been approved”

Traditional company Palmers threatens to stumble over corona loans. 500 employees were not paid their salaries.

(Bild: Peter Tomschi )

KTM, Kika/Leiner: Palmers could be the next traditional company to be added to the sadly prominent list of bankruptcies. The reason for the financial difficulties is reportedly a coronavirus loan worth millions. Now, not for the first time, taxpayers could be asked to foot the bill - unless another investor steps in.

Palmers and the pandemic? That rings a bell. That's right: in connection with the founding of the mask manufacturer Hygiene Austria, the company was not only a topic of discussion in the U Committee, it was also sentenced to a fine of 100,000 euros by an antitrust court. Peanuts, considering the financial turmoil the company is now in, two years after Corona ...

According to media reports, the salaries of around 500 employees were not paid on Friday and a public announcement is planned for Monday. According to reports, this is about an investor who is supposed to steer the ailing company back on track. The minutes of the Annual General Meeting at the end of January state that "there is currently an investor who is planning to enter and invest in the company in question. Should this investment take place, it is planned to carry out a capital increase." Palmers did not provide any details, even when asked. 

So all is well again? 
Has the traditional brand been saved? Hardly, say financial experts. They cite a coronavirus loan as the reason for the financial difficulties. Its repayment is due at the end of June, and Palmers does not have sufficient liquid funds for this. In the autumn, the company's annual financial statements stated: "A key assumption for the positive going concern forecast is the negotiation of the loans due on June 30, 2025 in the amount of EUR 14.418 million (Cofag)."

According to insiders, however, these negotiations have failed. "The Cofag loan accounts for 33 percent of the total debt. It can therefore be assumed that the state is the largest creditor," calculates financial ombudsman Gerald Zmuegg.

Palmers

• Palmers AG is wholly owned by P Tex Holding. This in turn is owned by Luca (22.2 percent) and Tino Wieser (27.7 percent), who are also managing directors of P Tex Holding. The remaining 50 percent is owned by CFA Contact-Finanz und Handelsaktiengesellschaft (CFA AG), based in Liechtenstein.
• In the 2023/24 financial year, the company's loss tripled to 14.7 million euros. Turnover fell from 71.5 million to 66.6 million.
• At the beginning of 2024, the lingerie group had 150 own locations and almost 100 franchise stores in 16 countries. In the fall, it announced that it would be closing 20 of its 120 Austrian stores.
• In 2023/24, the company employed around 550 people.

As with many other companies, the loan was approved with a term of five years. It was intended to finance economic effects that were due to the spread of coronavirus. At the time, the agency's guarantee ensured that the bank could indemnify the state for 90 percent of the loan amount if Palmers (or another company) did not pay on time. So in the end, the taxpayer pays. And probably not just for Palmers.

"Hope it doesn't go the way of Kika/Leiner"
In July 2024, when Cofag was liquidated, there was still a total of 219 million euros in liabilities. And if you look at the award to the underwear manufacturer in 2020, this quickly raises the question of whether it was checked carefully enough at the time.

As Cofag, I would clearly not have approved this guarantee and hope that the Financial Procurator's Office will examine it in good time this time - and not only in the event of insolvency when it is too late, as was the case with Kika/Leiner and Signa.

Finanzombudsmann Gerald Zmuegg

Bild: krone.tv

This is because the guarantee granted at the time was given at a time when the company was reporting losses and was almost twice as high as the equity. The cash flow was sufficient for a loan repayment of 20 years - but not for the specified five. This would have required a massive increase in cash flow. "As Cofag, I would clearly not have approved this guarantee on the basis of the figures available," said Financial Ombudsman Zmuegg, adding: "I hope that the Financial Procurator's Office will examine the matter promptly this time and not only in the event of insolvency, when it is too late, as was the case with Kika/Leiner and Signa." Especially when the guarantee was increased by another four million euros in 2022 - and thus at the end of the pandemic ...