The creditors of the C2H retail group will not have the best Christmas ever. The owner of the group, Michal Mička, wrote a letter to bondholders and other creditors that the company was going to enter insolvency proceedings due to coronavirus. Of the companies in the holding, the Pietro Filipi fashion retail network is at its worst.
If the financing bank, which is Česká spořitelna, agrees, Mička wants to solve the problems through reorganization, not bankruptcy. Both in the case of Pietro Filipi and the case of the parent company C2H. According to the entrepreneur, the reorganization should be significantly more advantageous for creditors than the sale of assets in bankruptcy. The company wants to present a reorganization plan soon.
“Despite all the efforts, which have included drastic cost reductions and relocations to online sales, it is clear that Pietro Filipi has no choice but to formally address the economic difficulties and rely on the tools offered by law in the form of insolvency proceedings and reorganization.”
According to Miček’s letter, Pietro Filipi and Kara’s sister stores are half of last year’s sales, but Kara is still better off. Unlike Pietro Filipi, it is possible to avoid insolvency. The decisive factor will be how Česká spořitelna responds to this as the only secured creditor.
“In both cases, the key for us is dealing with our bank, Česká spořitelna, as the only secured creditor. Its support is crucial for the reorganization of Pietro Filipi and the functioning of the Kara brand,” said Mička in a letter to creditors.
“We are negotiating with Česká spořitelna on the conditions and feasibility of reorganizing Pietro Filipi and further functioning of the Kara brand,” he added.
The document also shows that some creditors are becoming nervous about the fate of the money invested in C2H. “None of the funds were used outside the C2H group and did not go, either directly or indirectly, to the main shareholder, who has all his assets invested in the C2H group,” Mička assures.
C2H Retail Holding had a loss of 117 million crowns in the first half of the year, according to preliminary unaudited figures published by the company. It is also clear from the results that the company has struggled with profitability before.
In addition to the current delay from the first half of this year, the group is rolling back a cumulative loss of 143 million crowns from previous years.
Last year, the holding had a consolidated loss of 62 million. Revenues of the group in the amount of 895 million crowns remained 40 million below the plan.