William Malcolm

Court Approves Reorganization Plan For Kara Trutnov

The Regional Court in Hradec Králové approved the reorganization plan of the bankrupt fur trading company Kara Trutnov. This follows from the documents in the insolvency register. The reorganization is intended to preserve Kara’s business. Creditors agreed to the reorganization plan on October 25. Kara has been in insolvency proceedings since February. It has 160 creditors who demand 277 million crowns from it.

The reorganization plan was prepared by the Natland investment group, which is Kara’s largest creditor. The Natland group should become Kara’s owner during the reorganization. “The reorganization plan will be effective as soon as the decision approving it takes legal effect,” Natland said today. The majority owner of the group, Tomáš Raška, stated that the reorganization plan could subsequently be fulfilled within one month.

Kary’s creditor Pavel Bednář, who is Kara’s former CFO, appealed to the Regional Court’s decision on Monday to approve the reorganization plan on Wednesday. He told the court that he would justify the appeal by November 23. At the October creditors’ meeting, Cooper was the only one to vote against the adoption of the reorganization plan. He suggested to the court, in view of the offer of the entrepreneur Richard Benýšek to buy the property of Kara, to adjourn the proceedings. Bednář claims that in Kara’s bankruptcy, the return for creditors would be higher than in reorganization. According to him, Natland is trying to get Kara under price. Natland rejected the dishonest intent of the reorganization plan.

When deciding on the approval of the reorganization plan, the court also had to deal with the offer of businessman Richard Benýšek, who wrote to the court in October that he offered 103.88 million crowns for the purchase of Kara’s property. Experts calculated the value of Kara at 80.5 million crowns. The court described Benýšek’s offer as non-binding, unenforceable and revocable. Thus, according to the court, it cannot be taken into account when assessing whether the conditions set by law for the approval of a reorganization plan are met.

The court stated that the amount offered by Benýšek is higher than the value determined by the experts, but another thing is the actual level of satisfaction of unsecured creditors in the sale of Kara’s assets through bankruptcy. According to the court, the amount of satisfaction in the bankruptcy option would be affected by the costs of administration and monetization of assets and the satisfaction of receivables.

On November 5, Benýšek wrote to the court that he was serious about his offer. He said that his offer means a higher return for creditors than with the reorganization option. Natland said today that the creditors of the reorganization will get almost 30 percent higher satisfaction of their claims than if Kara went bankrupt. Raška stated at the October meeting of creditors that Benýšek’s proposal was not meant seriously and described it as a purposeful obstruction. Benýšek flatly rejected these claims.

The businessman Zdeněk Rinth, who joined the Natland group in this matter and is financing the rescue, is behind the rescue of Kara and the resumption of its operation. Rinth has been managing and financially supporting Karu since May. He previously stated that he was ready to invest up to 90 million crowns in rescuing Kara. In the future, Rinth should become Kara’s majority owner.

In mid-May, Kara, under Rinth’s leadership, began to reopen stores. It now has 26 stores open in the Czech Republic and six in Slovakia and employs about 150 people. Raška stated that the company will continue to be managed by Rinth, whose person is an important guarantee of Kara’s good relations with her business partners.

The Natland Group for Kara holds receivables worth 170 million crowns. According to the reorganization plan, it should capitalize its secured receivables of CZK 40.9 million by subscribing new shares of Kara, when it will become its sole owner as part of the reorganization. Natland is to be satisfied with the rest of the claims as well as unsecured creditors.

Unsecured creditors should recover at least 9.59 percent of their receivables, while in bankruptcy it would be 6.9 percent. To satisfy unsecured creditors, Natland will provide CZK 23 million in the form of a voluntary surcharge outside the share capital. The current owner of Kara, the C2H investment group of entrepreneur Michal Mička, will receive nothing during the reorganization.

Rinth was Kara’s owner until 2018, when he sold it to the C2H investment group. Kara herself filed for insolvency in early February. She said she was adversely affected by the restrictions associated with the coronavirus epidemic. According to Natland, the reason for Kara’s insolvency was also the failed business strategy of the former management and the provision of loans to other companies in the C2H group.