Germany's Cuban Cigar Distributor Formally Enters Insolvency

5th Avenue Products Trading GmbH, the company that brings Cuban cigars into Germany, Austria and Poland, is now formally in insolvency. The district court in Waldshut-Tiengen opened the proceedings on Nov. 1, two months after the company filed its request in September, when it said it could no longer fill orders.

The court appointed Dr. André Berbuer as insolvency administrator. In a four-page letter to the press, he makes a few points clear:

• The company is not broke. It has both money and cigars, but it cannot really do business.
• The cause is EU sanctions on Chen Zhi. Chen owns 28.55 percent of Habanos S.A. and is believed to hold around 15 percent of 5th Avenue. The European Union sanctioned him in late July over accusations tied to his other businesses, not to cigars.
• 5th Avenue is not accused of anything. According to Berbuer, Chen was not an active owner and his stake was far too small to control the company.

Berbuer says German law has no clear path for assets frozen this way. The insolvency process lets 5th Avenue pay its roughly 50 employees, but it still cannot operate normally, and he says that cannot last. He also warns that German shops cannot get Cuban cigars to sell, putting hundreds of jobs in the trade at risk.

No timeline or solution has been announced. The case matters well beyond Germany: Habanos S.A. counts it among the top five markets for Cuban cigars.