Klöckner liquidity crunch and Selecta’s Dutch court battle

Episode 6 of Credit Lens: Europe & Beyond examines two compelling cases that illustrate the increasingly complex dynamics within European distressed credit markets. Hosts Phoebe Appenteng and Katie McMahon dissect Klöckner Pentaplast’s deteriorating liquidity position and Selecta’s controversial Dutch court enforcement strategy.

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Klöckner Pentaplast’s Refinancing Collapse

The German packaging group’s financial deterioration represents a textbook case of how operational decline can accelerate refinancing pressures. The company faces immediate liquidity constraints with €79.4 million in overdue invoices while confronting €1.7 billion in maturities scheduled for 2026.

Key Financial Metrics:

• Leverage ratio: 8.7x
• Outstanding overdue invoices: €79.4 million
• Upcoming debt maturities: €1.7 billion (2026)
• Operational trajectory: Declining

The critical question centers on whether creditors and sponsor SVP Global can structure a viable out-of-court solution or whether the deteriorating fundamentals will necessitate a Chapter 11 filing. The packaging sector’s broader challenges, including raw material cost pressures and demand volatility, compound Klöckner’s specific operational difficulties.

Selecta’s Dutch Court Enforcement Strategy

Selecta’s approach to its refinancing demonstrates the evolving sophistication of European liability management exercises. What initially appeared as a conventional vending machine operator refinancing transformed into an aggressive enforcement action through Dutch courts.

Strategic Elements:

• Share pledge enforcement via Dutch legal framework
• Minority creditor displacement through legal maneuvering
• €23 million legal challenge highlighting creditor resistance
• Risk of future amendments embedded in new note structure

The Swiss operator’s tactics illustrate how European restructuring professionals are increasingly leveraging jurisdictional advantages to achieve outcomes that favor majority stakeholders. The €23 million legal challenge represents broader creditor concerns about the precedent such enforcement actions may establish.

Market Implications

Both cases underscore several critical trends within European credit markets:

Operational Stress Amplification: Klöckner’s situation demonstrates how operational challenges can rapidly transform manageable refinancing scenarios into liquidity crises, particularly when leverage ratios exceed sustainable levels.

Liability Management Evolution: Selecta’s enforcement strategy reflects the increasing sophistication of European restructuring techniques, with sponsors and majority creditors utilizing jurisdictional frameworks to achieve outcomes previously unavailable in traditional negotiations.

Creditor Protection Concerns: The legal challenges emerging from Selecta’s approach highlight growing tensions between efficiency in restructuring processes and minority creditor protection rights.

Closing Observations

The episode concludes with “Afternoon Tea,” featuring lighter commentary on cultural developments across Europe, including rescued livestock in Cheshire and corgi races in Vilnius. This segment provides necessary balance to the technical credit analysis while maintaining the program’s distinctive blend of financial expertise and cultural awareness.

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Produced by two-time Emmy Award-winning producer Tanya Hubbard.