Matt Atlas

Antimafia Police Investigating Collapse Of Arca Investments

The collapse of Arca Investments, the parent company of the Arca Capital Group, is the biggest bankruptcy since 2000.

The National Centre against Organized Crime has begun to deal with the bankruptcy of the investment company Arca Investments. Around 1,900 creditors have receivables worth 19 billion crowns from the company.

The case of the giant collapse of the investment company Arca Investments has been investigated by the National Centre against Organized Crime (NCOZ). The stimulus was a criminal complaint from the IFIS fund, which holds part of the receivables from Arca. The case of Arca Investments spread between Czechia and Slovakia is the biggest bankruptcy since the collapse of the Investiční a Poštovní banka (IPB) in 2000.

“I can only say that our department is dealing with this matter. It is in the checking phase, “said Jaroslav Ibehej, spokesman for NCOZ, when asked by SZ Byznys. Checking is the initial stage of criminal proceedings. At the end of it, the police decide, on the basis of the information gathered, whether to initiate criminal proceedings or, for example, to postpone the case.

“The reason for filing a criminal complaint was that we were contacted by more and more creditors who signed bills of exchange at a time when Arca already knew it was bankrupt. That means they were selling even though they knew they would not return the money, “said IFIS spokeswoman Kamila Svobodová.

“Based on the decision of the management of Arca Investments, the sale of bills of exchange was stopped with the onset of temporary protection under the provisions of Lex Corona (Act on Extraordinary Moratorium in Slovakia – editor’s note),” said Arca’s media representative Ondřej Pechar. Arca announced the entry into extraordinary protection against creditors in Slovakia on June 26th 2020.

Till the last moment

The first signs of Arca’s financial problems appeared in the first half of the last year. According to the findings of SZ Byznys, a member of the Board of Directors of Arca, Juraj Dvořák, still on 19th June 2020 urged his co-workers to continue selling bills of exchange. That is, only a week before Arca applied in Slovakia for covid protection from creditors. At the same time, already in the first half of June 2020, Arca was more than a month in delay with the payment of liabilities from due bills, Hospodářské noviny wrote at the time.

Dvořák was also a co-owner of Deluvis, which was one of the important distributors of bills of exchange. “My cooperation with Arca Investments took place on the basis of mandate agreements on cooperation and provision of services and was terminated on my part in June 2020,” Dvořák responded. “I do not want to return to the details of the cooperation, but I can assure you that everything went in accordance with the contractual rules and based on information and instructions from the Chairman of the Board and majority shareholder of Arca Investments Mr. Rastislav Velič and his partners,” added the manager.

Around 1,900 creditors lent Arca Investments around 19 billion CZK. They lent most of this amount through short-term bills of exchange with the vision of higher yields. The investment company borrowed short-term money for long-term business projects within the Arca Capital group. Many interested parties around the case expected the case to be flipped into the criminal law level.

Arca is pushing for the resolution of bankruptcy by reorganization, with the proviso that it will be the most advantageous way for creditors. A key meeting for Arca’s future will be the creditors’ meeting scheduled for October 5th.