Game over
June 15, 2011
Troisdorf-based Teldafax, the largest of Germany's independent discount electricity and gas suppliers, filed for insolvency at a district court in Bonn on Tuesday.
That leaves roughly 700,000 if its customers in a bind. While there is no likelihood their electric or gas lines will be cut off, those who paid for their utilities in advance could lose their money depending on how the insolvency proceedings end.
Bankruptcy administrator Biner Bähr said he was determined to rescue Telkdafax, but conceded that would require the company to retain as many existing customers as possible.
"The market has lost a lot of confidence in Teldafax in recent months," Bähr said. "That doesn't make a solution easier."
If Teldafax is force to offload customers, they will be automatically transferred to their region's dominant supplier, which typically charges premium rates.
That happened in May, when Swedish energy supplier Vattenfall blocked Teldafax from its networks in Berlin and Hamburg due to unpaid bills. Teldafax immediately lost 45,000 customers.
Angry consumers
Consumer advocates say the discount utilities sector needs stronger regulation.
"We can't allow (electricity and gas) supplier to advertise with dumping prices, demand the money in advance and then ultimately leave the consumers standing out in the rain," Gerd Billen of the Federation of German Consumer Organizations said.
Teldafax, which employs some 600 people and boasts a turnover of 500 million euros ($720 million) per year, has been struggling for some time.
Earlier this month, Teldafax announced it would end its sponsorship of the Bayer 04 Leverkusen soccer club at the end of June.
In April it appointed restructuring specialist Hans-Gerd Höptner as its new CEO, but he left after less than two months.
The company has also been hopping from one chief investor to another. In March the Cyprus-based and Russian-owned Prime Mark Financial Group took over with an unspecified investment believed to be worth tens of millions of euros.
That fresh capital couldn't save Teldafax, though. The German newspaper Handelsblatt reported Tuesday that some of the company's most loyal employees have been shredding documents "all day long" for the past two months.
Author: Gerhard Schneibel (dpa, Reuters)
Editor: Sam Edmonds