No, MV Agusta Hasn’t Declared Chapter 11 Bankruptcy

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Despite what you may have read, MV Agusta isn’t declaring protection from creditors under Chapter 11 of the United States Code. But, we can understand the confusion.

Just so we are clear, by definition Chapter 11 bankruptcy proceedings are a figment of American law. Since MV Agusta is an Italian company, it would be fundamentally wrong to say that MV Agusta Motor S.p.A. was seeking a protection under the US Code that pertains to bankruptcy.

The branch of MV Agusta that would be able to file for Chapter 11 would be MV Agusta USA, but the US subsidiary is not embroiled in MV Agusta Motor’s financial troubles, which makes the use of the term incredibly inaccurate.

The report of MV Agusta declaring Chapter 11 first surfaced from Cycle World, which in all likelihood used the term “Chapter 11” as a quick way to explain to its American readership what was happening in Italy.

The reality is that MV Agusta’s “concordato in continuita” will function is some ways like a Chapter 11 bankruptcy, and in some ways not. This is a very complicated process, which we have already discussed at length in this article.

Like in a bankruptcy proceeding, MV Agusta is working with its interested parties to formulate a plan that will allow the motorcycle manufacturer to continue with its regular operations, which would entail the company’s creditors agreeing to new terms for their loans.

As such, MV Agusta’s debt would be frozen, giving the Italian company the breathing room it needs to restart its motorcycle production. However, production volumes will likely be scaled back, probably to 7,000 units, which means that MV Agusta will also be laying off some of its workforce.

The idea is that once MV Agusta is back on a stable footing, it will once again be paying back the €40 million it owes.

MV Agusta’s stakeholders still need to sign-off on the debt restructuring though, with the next meeting set for April 8th. We shall know more about the future of this iconic brand at that point in time.

Source: Varese News