Interstate Tire & Rubber insolvency linked to non-payment by Austrian tyre wholesaler
According to an official report on the insolvency of Interstate Tire & Rubber Company BV, the direct cause of the firm’s bankruptcy was the non-payment of invoices by a customer, an Austrian tyre wholesaler named in the document as Bruckmüller GmbH.
While Interstate Tire & Rubber’s equity at the end of 2016 only amounted to 64,000 euros due to losses experienced in 2013, 2014 and 2015, this low equity is not given as a causal factor in the bankruptcy. Instead, it is reported that on the basis of good relations between the director of Bruckmüller GmbH and Theo de Vries, sales director at Interstate Tire & Rubber, the Dutch company offered Bruckmüller extended credit terms and did not report the Austrian firm’s growing debt to credit insurer Euler Hermes.
The document comments that rumours within industry circles suggested that Bruckmüller was experiencing difficulties, but the company refuted allegations to this effect. However, in early November 2017 the Bruckmüller group applied for insolvency and came to a creditors’ agreement to pay 20 per cent of its debts by the end of 2019.
Interstate Tire & Rubber’s decision not to report Bruckmüller’s growing debt to Euler Hermes then came back to haunt it. Its debtor portfolio financier, ABN Amro, cancelled its credit for Bruckmüller’s debt of over 1.2 million euros, claiming that this debt had not been reported to Euler Hermes and was therefore not covered by Interstate Tire & Rubber’s credit insurance.