The German production sites of DOMO Chemicals will remain operational for now after the state of Saxony-Anhalt intervened to prevent an immediate shutdown of the Leuna facilities. Citing public safety concerns, the state ordered continued operations at a minimal level, taking a full closure off the table in the short term.
Authorities determined that a safe shutdown of the Leuna plant is currently impossible due to prevailing weather conditions. An uncontrolled halt to production would pose risks to human health and the environment.
As only the existing operators are capable of managing those risks, the state has imposed a so-called “substitute performance", effectively mandating continued operation to avert danger. The measure does not relieve DOMO Caproleuna GmbH of its legal responsibilities as plant operator.
“It is very good news that the state has enabled continued production – albeit at reduced capacity – for the time being,” said Lucas F Flöther, court-appointed preliminary insolvency administrator from the law firm Flöther & Wissing. “What this means for the further course of the insolvency proceedings remains to be seen. What is clear, however, is that we have gained valuable time to examine whether and under what conditions a long-term stabilisation might be feasible.”
According to Flöther, a possible path forward could include a takeover by a third party. In that case, the state could withdraw from the substitute performance, restoring the company’s prospects for long-term operation.
The intervention follows the insolvency filings of three German subsidiaries of the DOMO Chemicals Group on 25 December. The situation escalated last week as the companies struggled to secure essential supplies.
Continuous production requires reliable deliveries of energy, industrial gases and cooling agents such as liquid nitrogen—supplies now at risk because the companies lack the funds to pay vendors.
Efforts to secure emergency bridge financing collapsed last week after negotiations between creditors and the shareholder failed.
In a final attempt to avert a shutdown, Saxony-Anhalt’s Minister of Economic Affairs, Sven Schulze, convened crisis talks in Leuna on Monday. Participants included company management, the works council, trade union IGBCE and site operator Infraleuna. With creditors unwilling to compromise in time, the state moved ahead with the substitute performance order.
In parallel, the Federal Employment Agency has approved advance financing of insolvency benefits for around 585 employees. Wages and salaries will continue to be paid on time throughout the preliminary insolvency proceedings, which are expected to run until the end of March. The measure covers all three insolvent DOMO entities, and production at the Premnitz site will also continue.
The insolvency affects DOMO Chemicals GmbH in Leuna (around 35 employees), DOMO Caproleuna GmbH in Leuna (around 480 employees), and DOMO Engineering Plastics GmbH in Premnitz (around 70 employees).
