Odsherred Municipality faces unprecedented reconstruction petition from Nordea for Odsherred Forsyning

After months of intense negotiations between Odsherred Municipality and Nordea, the latter has submitted a reconstruction petition for Odsherred Varme and Odsherred Forsyning to the bankruptcy court. Claus Steen Madsen, the municipal director, stated at a press conference that reaching an agreement on the future of Odsherred Forsyning’s heating company has proven impossible between the two financial creditors.

It is uncommon for municipal utility companies to face reconstruction, previously referred to as bankruptcy. Per Nikolai Bukh, a professor of management control at Aalborg University, noted that such a situation is highly unusual and unprecedented for a municipal utility. Bent Ole Gram Mortensen, a professor in energy and utility law at SDU, echoed this sentiment.

The reconstruction process is initiated when there is a chance for an insolvent company to regain solvency. This may involve selling parts of the company or restructuring its debts. The bankruptcy court appoints one or more reconstructors, allowing the company’s management to continue daily operations, although major decisions require the reconstructors’ approval. A reconstruction plan must be approved by the creditors at a meeting, followed by the submission of a detailed proposal to the court vote.

Currently, Odsherred Municipality is liable for over one billion kroner in loans taken out by companies under Odsherred Forsyning, including more than half a billion as a loan guarantee for Odsherred Varme. Since stopping the rollout of district heating on April 9 due to economic concerns, several villages have been left uncertain about their connections to the heating system. While the future remains unclear, existing heating customers are assured of continued service.