KTM AG is facing pushback from a major U.S. creditor as it heads toward a crucial debt restructuring vote on February 25th. The issue centers on American hedge fund Whitebox Advisors LLC, which holds KTM’s Schuldschein promissory notes and has accused the Austrian manufacturer of using “delaying tactics” to avoid negotiations over its alternative proposal. With the final vote looming, the standoff adds another layer of uncertainty to parent company Pierer Mobility’s efforts to steer KTM through its financial crisis.

Anyone following Team Orange knows that KTM, Europe’s largest motorcycle manufacturer, has been openly struggling since mid-2024, when signs of financial trouble surfaced. By November, the Austrian company entered voluntary insolvency proceedings, kicking off a series of creditor hearings, with the final vote on KTM’s restructuring plan set for the end of this month, when creditors holding at least 50 percent of the debt must approve the plan in order for it to move forward.

So far, Pierer’s self-administered plan has focused on internal measures such as workforce reductions, production delays, and asset sales—including MV Agusta, which was sold back to its previous owner in early February. 

KTM’s latest internal shift took shape at a January 27th supervisory board meeting, where Stephan Zöchling was elected as the new chairman. Following his appointment, Zöchling expressed his commitment to guiding the Pierer Mobility Group through its recovery, stating he was “happy to take on the responsibility of actively shaping the process.”

At the same meeting, a vote passed with 99 percent approval to initiate a capital increase by issuing 16.8 million additional shares, bringing the total to 33.8 million. With shares priced at approximately €18 each, the move is expected to generate around €600 million, providing crucial funds to satisfy creditors and support the company’s financial recovery. However, the capital increase alone is not enough to satisfy KTM’s own proposed restructuring plan, in which Pierer Mobility is responsible for independently securing up to €900 million in new capital in order to stabilize the company.  In total, creditors have filed €2.2 billion in claims. 

KTM AG’s current restructuring plan would allow Pierer Mobility — now led by CEO Gottfried Neumeister after Stefan Pierer stepped down last month — to retain control of the company while creditors are due to recover approximately 30 percent of their loans. However, Whitebox Advisors, one of KTM’s major creditors, has rejected the plan, arguing that its counter proposal offers a higher recovery rate. The hedge fund has also claimed that KTM has refused to engage with its proposal, according to a letter seen by Bloomberg news agency. 

Minneapolis, Minnesota-based Whitebox Advisors’ alternative plan for KTM, introduced in January, is very different from what Pierer Mobility has in the works, with creditors receiving at least 45 percent back on their loans. And there’s a catch: KTM’s current owners would lose all their shares, meaning they would no longer control the company. In their place, creditors would take over ownership.

To make this work, Whitebox’s plan allows creditors to put in new money to help KTM recover. Those who make fresh investments would receive 30 percent of the company’s equity. The remaining 70 percent of equity would go to existing creditors as part of the debt repayment. However, if existing shareholders, including Pierer Mobility and India’s Bajaj Auto, want to regain control in the future, they would have the option to repurchase up to 70 percent of the shares from the creditors at a later, unspecified, date. 

It’s easy to see why KTM is not eager to consider this alternative plan, but the reality is that Whitebox does hold some sway — and this isn’t the hedge fund’s first rodeo. Specializing in distressed asset investing and credit arbitrage, Whitebox is known for its activist strategies and has had notable tussles with LG Corporation and German battery manufacturer, Varta. 

With just two weeks until the final vote, much is at stake. If KTM’s creditors reject the restructuring plan on February 25th, the company could face severe financial and operational fallout. If KTM’s creditors reject the proposed restructuring plan, the company could be compelled to enter formal insolvency proceedings where it loses control over the company’s operations, an event that could potentially lead to the liquidation of assets, including its subsidiaries like Husqvarna and GasGas. Production and sales would also likely be disrupted, straining the supply chain, damaging customer trust, and putting thousands of jobs at risk.

Creditors — especially those without secured claims — could also suffer, sparking legal battles as lenders fight to recover their investments. In the worst case, a formal bankruptcy could result in KTM’s intellectual property and manufacturing facilities being sold off, possibly ending the brand’s presence in the market.

However, all hope wouldn’t be lost. In some cases, courts have the power to approve restructuring plans even without the 50 percent creditor agreement, depending on legal frameworks. For now, KTM and its creditors are likely to continue negotiations, searching for a compromise that avoids the worst-case scenario.

For adventure-riding fans, it’s tough to imagine the scene without KTM and its sister brands, Husqvarna and GasGas. After all, the Austrian powerhouse looks strong on the surface, rolling out new 390 models, a next-gen 1390 Adventure R flagship, and updates to the 790/890 Adventure lineup. Dakar wins in RallyGP and Rally2, three straight Enduro World Championship titles and back-to-back Supercross season opener victories for Pierer brands only add to the shine. 

Yet beneath the surface, the outlook is far from bright, and come February 24th we’ll have a much better idea of whether KTM will throttle itself out of peril, or run out of trail. 

Author: Jamie Elvidge

Jamie has been a motorcycle journalist for more than 30 years, testing the entire range of bikes for the major print magazines and specializing in adventure-travel related stories. To date she’s written and supplied photography for articles describing what it’s like to ride in all 50 states and 43 foreign countries, receiving two Lowell Thomas Society of American Travel Writer’s Awards along the way. Her most-challenging adventure yet has been riding in the 2018 GS Trophy in Mongolia as Team AusAmerica’s embedded journalist.