Arca Investments Says Reorganization Plan Ready

Arca Investments, in cooperation with the creditors’ committee and advisers to PwC and Badokh, prepared a draft of the terms of its reorganization. It is to provide creditors with at least 50 percent satisfaction of claims over five years.

“We believe that the reorganization plan will be acceptable to all our creditors,” said Peter Janiga of Arca Investments. According to him, the proposed method of reorganization is successfully dealing with a legally, economically and tax-wise complex situation. “The only alternative is an audition, which doesn’t make sense. Bankruptcy would mean hundreds of millions of euros less satisfaction in five to ten years, “he added.

The disadvantage of bankruptcy is based on the decrease in the value of Arca Investments’ assets in the event that it could not be further developed and enhanced and, on the contrary, it was sold at an economically unfavorable moment, the company claims. The value of assets in the case of reorganization ranges from 7.5 to 11.4 billion crowns, or four billion in the event of bankruptcy, said Janiga.

Langmeier & Co does not agree with the reorganization plan. “I find him non-transparent and untrustworthy. And even given the debtor’s not very active approach to insolvency proceedings so far, I have not a single reason why I should recommend this reorganization plan to clients. In addition, I have reasonable doubts that this debtor’s plan can be implemented in fact and in law, “said lawyer Jan Langmeier.

“Arca is confusing creditors to gain another five years. The choice is not between reorganization or bankruptcy, but between a reorganization prepared by the same group that led to insolvency and a reorganization led by creditors, “said Marek Indra from the IFIS fund. He will enforce the withdrawal of the right to compile a reorganization of the debtor, he wants a creditor reorganization under strict conditions of the debtor’s cooperation and the current conditions of dismissal of the debtor’s insolvency administrator.

“We are glad that there is finally a proposal on the table from the debtor at all, we will study it carefully and comment on it at the creditors ‘meeting,” said Jan Stávek, managing partner of Traficon Advisors, who covers the third largest creditors’ association. However, it was stopped by the quantification of assets at only 7.5 to 11.4 billion crowns. According to him, in the first half of the year, the group had assets that could be monetized for at least 13 to 16 billion crowns.

If the proposal is accepted, a new company based in the Czech Republic will be established, to which the vast majority of Arca Investments’ assets will be transferred. It will be divided into four groups according to type, finance, industrial services, hospitality and real estate. The assets will be valued and, if necessary, sold in such a way as to maximize the satisfaction of creditors. The company will be run by new management under the supervision of creditors. The current management of Ark will not participate in its management.

The prepared summary will be discussed by creditors at the next meeting of creditors, which will be on October 5. Based on it, they will decide whether to support the intention to reorganize the company, which will then prepare a reorganization plan. “Thanks to cooperation with creditors’ representatives, we know in which direction the reorganization plan should go. Therefore, we believe that creditors will support the resolution of bankruptcy in the form of reorganization and allow us to submit a reorganization plan, “explained Petr Smutný from PwC.

The Municipal Court in Prague opened local insolvency proceedings with Arca Investments in mid-May. According to the creditors, the court ruled that the main proceedings would take place in Slovakia, which according to them is not advantageous for Czech creditors. The court called on all creditors to file their claims within two months.

Receivables for approximately CZK 12 billion are registered in insolvency proceedings with Arca Investments in the Czech Republic. Arca Investments prepared a reorganization plan in cooperation with Tarpan Partners consultants and the law firm Badokh. The group’s liabilities amount to 18.6 billion crowns. Of this, liabilities from bills of exchange represent over 15.5 billion crowns, while creditors from bills of exchange in the Czech Republic account for 13 billion crowns. There are 1889 creditors, of which over 80 percent are in the Czech Republic. The only secured creditor is J&T Banka.