The closing of the German company’s shoe manufacturing plant in Portugal, which employs 1,350 people, is causing huge severance charges which, combined with other factors, have forced Eric Rohde KG to apply for insolvency proceedings at a German court. Other factors were quality problems with the items whose sourcing has been shifted to China and the bad sell-out of the latest Winter collection because of the mild weather.

The 60-year-old German company continues to employ 510 persons in its home town of Schwalmstadt, where local authorities have agreed to subsidize the workers’ wages for at least three months, pending the formulation of a new business plan and a possible takeover of the company, which has been producing more than 7.5 million pairs annually. Rhode employs another 90 persons in Austria.

Besides the Rohde brand of comfort shoes, the company markets footwear under the license of Daniel Hechter and Westcoast. It also has a subsidiary for shoe components, Alit-Werk Carl Schmitt, which is being declared insolvent as well. Rhode’s trustee, Carsten Koch, has reportedly estimated the company’s liabilities at about €20-25 million.