German Red Cross (Deutsche Rote Kreuz – DRC) in the region Braunschweig/Salzgitter declared bankruptcy, a major challenge for local social assistance and the employment sector. The organization, which has run dozens of facilities for decades — including kindergartens, youth centers, nursing homes, guidance centres, and emergency services — employs respective 100 people. announcement of bankruptcy is simply a threat to about 450 employees, however, the activities of the DRC will proceed for the time being.
Failure under supervision – maintaining control of actions
The territory court agreed to conduct insolvency proceedings in a self-government manner, allowing the organisation to keep control over regular operations under the supervision of the appointed administrator. This means that despite the hard financial situation, DRC facilities in the region will proceed to operate.
In order to safe the employees' salary, funds from the national Labour Agency were allocated under bankruptcy benefits. So that's about 450 employees he can number on the stableness of wages for at least the nearest time.
Main causes of the crisis – pandemic and rising energy costs
As stressed by the representatives of the DRC, the main financial reasons for the problems are the effects of the COVID-19 pandemic and the sharp increase in energy prices resulting from the war in Ukraine and its economical sanctions. The organization hoped to improve its financial situation by selling a erstwhile nursing home, but the transaction was importantly delayed. This hold was 1 of the factors that yet forced the DRC to declare bankruptcy.
The importance of the DRC to the local community and economy
The German Red Cross branch in Braunschweig has been operating continuously since 1948, as a pillar of local social and wellness assistance. Annually, the facilities make about EUR 20 million revenue, which demonstrates their importance in the region.
Organisational facilities support a wide scope of social needs – from childcare and youth care, support for seniors, to medical rescue. Therefore, the financial problems of the DRC not only affect the labour market, but can besides have a wide impact on the quality and availability of social services.
Restructuring plan and future prospects
Despite the hard situation, the management of the DRC is cautiously optimistic. The planned preliminary restructuring plan envisages corrective actions to reconstruct financial stableness and enable further operations. The team's experience and operational transparency will play a key role, which is essential for building social trust and supporting the organisation of institutions.
The future of the organization will be decided in the coming weeks and months. The success of the recovery plan can guarantee continuity and protection of jobs, while failure can consequence in further limitations in the functioning of the facilities.
Background and importance of the situation in a broader sense
The failure of 1 of Germany's most recognized and valued humanitarian organisations is unprecedented. This shows the serious and far-reaching consequences of the pandemic and the current energy crises, which have besides affected the non-profit sector.
It is besides a signal to another social and charitable organisations that may face akin financial challenges. Financing models and support from the state and local communities will request to be adapted to guarantee continuity of services.
Continued here:
The Red Cross declared bankruptcy. Hundreds of jobs at risk
