Receivables for more than ten billion crowns, which were reported to OKD in 2016 by the British bank Citibank, are justified. The Insolvency Court in Ostrava ruled again today. However, the decision is not yet final. Insolvency administrator Lee Louda told CTK that he would appeal against the decision.
In 2019, the Ostrava court ruled that Citibank’s receivables were valid. The insolvency administrator and the public prosecutor appealed against this judgment. Last October, the High Court in Olomouc overturned the judgment of the Ostrava court in an appeal proceeding and returned the case to him. Now, however, the court was dealing with only part of the dispute, resolving whether the performance contracts received by OKD corresponded to the liability contracts.
The regional court has now dismissed the insolvency administrator’s action again. After proving, supplemented by expert opinions, the court came to the conclusion that the consideration that OKD received for the loan agreements and the bond issue was reasonable. Most of the lawyers representing both sides of the dispute did not come to the announcement of the decision, so journalists prevailed in the courtroom.
Citibank represents holders of bonds issued in 2014 by New World Resources (NWR), which at the time was the owner of OKD. OKD, which ended in bankruptcy in 2016, was liable for these liabilities.
The insolvency court was bound by the legal opinion of the appellate court in the new decision. Judge Simona Pittermann said the appellate court agreed that the claims existed and were legal. However, according to his instructions, the insolvency court had to deal with the adequacy of the performance that OKD received for the liabilities from the bond issue and the loan agreement.
The judge said that NWR had restructured its debts in 2014. As a result, instead of the EUR 500 million bonds in 2010, new EUR 300 million bonds were issued, guaranteed by OKD. “So their value was 200 million lower than the bonds in 2010. This, of course, led to a reduction in debt,” the judge said.
According to her, the volume and composition of guarantee liabilities decreased. NWR Group acquired new capital and total debt decreased. The court therefore concluded that the consideration received by OKD was proportionate. “They received a reward for accepting guarantees corresponding to the usual price, and the assumption of guarantees had a positive effect on its property and higher satisfaction of their creditors,” Pittermann said.
The insolvency administrator does not agree. “We continue to insist that OKD was not provided with adequate consideration for the provided guarantee. In the proceedings we pointed out specific errors and incorrect conclusions of the expert opinion submitted by the defendants, but the court did not take them into account,” said Louda.
Receivables from OKD were reported in 2016 by over 550 creditors, together they demanded more than 23 billion crowns. However, the insolvency administrator recognized receivables for only about a quarter of this amount.
After 2016, OKD underwent a reorganization. The mines and operating assets were invested in a new company, the owner of which became the state in 2018 through its company Prisko. It was later renamed OKD, while in the original OKD only receivables from former owners remained and its name was changed to OKD Receivables Management.
The process that the original company OKD went through can no longer be reversed. The outcome of the litigation can thus only affect the distribution of money to the company’s creditors.
OKD is the only producer of hard coal in the Czech Republic. But mining is gradually coming to an end, because it does not pay off. OKD only mines in the ČSM Mine in the Karviná region, where coal is to be mined at least until the end of next year. More than 3,500 people work there.