Qimonda has filed for insolvency but this does not mean the end of the company. Under German law a period of protection from creditors is allowed to see if the company can be re-structured in a way that allows it continue as a going concern.
"German insolvency law offers the opportunity to accelerate the restructuring process that has already been started in order to reposition the company back onto a solid base," said Kin Wah Loh, president and CEO of Qimonda. "We assume we will be able to continue our business within the context of our restructuring program with the support of the temporary insolvency administrator and our employees."
Qimonda will now try to effect a viable re-structuring. The process has already been started with the sale of its stake in Inotera, ramp down of Qimonda's 200-mm production in Richmond, Virginia, the establishment of backend manufacturing for components and modules in Dresden, and consolidation of its product development in Munich and Xi'an.
In a statement, the company said: "The Qimonda Management Board will do its utmost, subject to the agreement of the preliminary insolvency administrator, to secure the financial funds necessary for the company's reorganisation in negotiations with potential lenders and investors. Given Qimonda's technological strengths, the Board sees good chances for success."
The "technological strength" includes its buried wordline technology which, believes Qimonda, could give it an edge in the market.
Qimonda had hoped to save itself with a financial package amounting to €325m being delivered by the State of Saxony, the government of Portugal and Qimonda's 77.5% owner Infineon, but the arrangements for this could not be completed before it became necessary to file for insolvency, says Qimonda.
Infineon has said it is concerned about Qimonda declaring outright bankruptcy because this may give rise to legal claims against Infineon.
Infineon has set aside €125m for potential liabilities from these claims. A statement from Infineon states: "Following Qimonda's insolvency filing, Infineon may be exposed to a number of significant liabilities relating to the Qimonda business, including pending antitrust and securities law claims, potential claims for repayment of governmental subsidies received, and employee-related contingencies. We anticipate that the majority of any potential cash obligations we may have in connection with these matters would be payable – if at all – in periods after our 2009 financial year.
"We intend to increase provisions in our quarterly accounts for the first quarter of fiscal 2009 for pending antitrust and securities law claims, and we anticipate creating additional provisions in connection with those potential liabilities issuing from Qimonda's business which to us seem probable and which we can estimate at this time."
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