Nilfisk Faces 23M Euro Setback in Tornado Insurance Dispute

COPENHAGEN, Denmark – January 16, 2026 – By James Green

Nilfisk Holding A/S, a global leader in professional cleaning equipment, has suffered a significant legal and financial blow after a Danish appellate court ruled against it in a protracted insurance dispute. The Eastern High Court found in favor of the company's insurer, reversing an earlier court decision and exposing Nilfisk to a liability of approximately 23 million euros, including interest and legal fees.

The cleaning equipment manufacturer immediately announced its intention to fight the decision, vowing to seek permission to appeal to the Danish Supreme Court. The case stems from the destruction of the company's US distribution center in Springdale, Arkansas, which was struck by a powerful tornado on March 30, 2022.

“We are disappointed with the outcome of the Eastern High Court’s ruling, which is contrary to our understanding of the facts of the case and our expectations,” stated Nilfisk CFO, Carl Bandhold, in a company release. “Based on external legal advice, we will seek leave to appeal the decision to the Supreme Court.”

A Perilous Path to the Supreme Court

The dispute began when Nilfisk’s insurer filed a lawsuit in Denmark on October 15, 2022, regarding the insurance payout for the destroyed American facility. While the Court of first instance had initially ruled in Nilfisk's favor, the insurer's successful appeal now places the burden back on the company.

Nilfisk's path forward is fraught with legal hurdles. Gaining access to the Danish Supreme Court for a third-instance hearing is not a right but a privilege granted by the independent Appeals Permission Board (Procesbevillingsnævnet). Permission is rare and typically reserved for cases that raise issues of “principiel karakter”—matters of fundamental legal principle with implications beyond the specific dispute. Cases that hinge primarily on evidence assessment are often denied.

Historical data underscores the difficulty of this process. In 2017, for instance, the board granted permission in only 17% of civil cases, highlighting the selective nature of the nation's highest court. Nilfisk must now convince the board that its case has significant legal merit and a reasonable prospect of overturning the High Court’s judgment.

More Than a 'Special Item'

While Nilfisk has consistently categorized the dispute as a “special item” that will not affect its operating results, the 23 million euro figure represents a tangible financial impact. A review of the company’s recent financial statements provides critical context for the potential strain this liability could impose.

According to its Q3 2025 interim report, Nilfisk held a net interest-bearing debt of 312.6 million euros. A 23 million euro cash outflow would increase this burden by over 7%, further elevating its financial gearing ratio, which stood at 2.3 at the end of the quarter. Such a payment would significantly exceed the company's free cash flow, which was 10.5 million euros in Q3 2025 and just 7.7 million euros for the entire 2024 fiscal year.

This potential cash drain comes as Nilfisk navigates a challenging market, focusing on operational efficiencies and cost reductions to maintain its EBITDA margin guidance of 13-14%. For investors, the unexpected liability, despite its non-operating classification, raises concerns about the company's cash reserves, balance sheet strength, and exposure to complex international legal risks.

Echoes of a US Lawsuit

The Danish court's rationale has not been made public, but the legal conflict in Denmark does not exist in a vacuum. It runs parallel to a separate but related lawsuit in the United States that offers a potential explanation for the insurer's actions. Following the 2022 tornado, Nilfisk's US landlord, Fort Worth Partners LLC, sued the company for breach of contract.

The landlord argued successfully that Nilfisk had failed to fulfill its lease obligation to maintain “all-risk” commercial property insurance covering the full replacement cost of the building. The insurance policy Nilfisk held had a limit of $5.1 million, whereas expert testimony placed the building’s replacement cost as high as $27.7 million. A US federal judge ultimately awarded the landlord a $14.69 million judgment against Nilfisk for this underinsurance.

This context suggests the Danish insurer's claim may be based on similar arguments, contending that Nilfisk failed to meet its obligations, thereby altering the insurer's liability. The insurer's total claim was reduced from an initial 19 million euros to 17 million euros (before interest and fees), indicating a complex legal assessment by the High Court.

The Long Recovery

Operationally, Nilfisk moved quickly to recover from the natural disaster. A new US distribution center was operational within months of the tornado, though the company acknowledged that parts availability and flow took significant time to return to pre-incident levels, impacting sales and margins in late 2022.

Since then, the company has invested in strengthening its supply chain, including a major SAP implementation in its US division in September 2024 to enhance operational efficiency. However, the Americas region has continued to face headwinds, with the company recently classifying its US high-pressure washer business as an asset held for sale. This strategic shift, combined with the lingering financial and legal fallout from the tornado, paints a picture of a company still managing the long-tail consequences of a disaster that struck years ago.