KTM tries to avoid bankruptcy with self-administration filing

That sounds like an sensible step for a manufacturer that recently cut back production, laid off workers, and sought company-saving financing. But, if you’re anything like me, you’re wondering how “self-administration” can solve the brand's insolvency issues.

Under the Austrian Restructuring Act, companies are eligible for court-supervised restructuring proceedings if “insolvency of the debtor (KTM, in this instance) is probable.” The debtor initiates the process by submitting an application that includes the company’s finances, assets, and proposed restructuring plan. KTM AG plans to apply for such protections on Friday, November 29. 

During the self-administration period, KTM CEO Stefan Pierer and Co-CEO Gottfried Neumeister will remain at the helm, but the court will appoint a restructuring administrator. The ultimate goal of the process is for KTM to agree on a reorganization plan with its creditors within 90 days. 

That includes what KTM calls a “redimensioning of production,’ which aims at reducing KTM’s excess stock over the next two years. It’s anything but smooth sailing, though. The brand predicts “a reduction in operating performance” totaling over €1B ($1.05B) in 2025 and 2026.

KTM parent company Pierer Mobility AG also acknowledged that additional potential losses include one-off self-administration expenses like necessary write-downs (capitalized development costs, for example), staff-reduction costs, and a shortfall in fixed costs (due to reduced operating performance). As a result, the Austrian marque expects a negative annual net in the “high three-digit million range” for the 2024 financial year.

This is just the latest development in KTM’s recent woes, which includes slow sales in Europe and the United States as well as public backlash caused by widespread LC8c camshaft issues. Yes, things have only gotten worse for KTM but it hopes that the self-administration process will lead it to better times.