IFIS investiční fond a.s. filed an insolvency petition against Arca Capital Slovakia on Thursday at the Prague Municipal Court. IFIS stated that it is trying to enforce bankruptcy in the Czech Republic in the interest of creditors, even though the debtor is formally domiciled in Slovakia. IFIS is taking steps to unify its creditor base and is repurchasing receivables from the Arca Capital Slovakia.
The Czech-Slovak investment group Arca got into trouble in connection with the coronavirus crisis; in the Czech Republic and Slovakia, its branches have already received judicial protection from creditors. According to its majority co-owner Rastislav Velič, the group will not fully pay all its liabilities worth hundreds of millions of euros and wants to restructure under the protection of the courts.
According to the Slovak Daily E, Velič expects that the group’s clients will significantly or definitely get back more than half of their money when they are debt relief. “Before the coronary crisis, our liabilities and the value of Arca’s assets were at a balanced value of about one billion euros. The coronavirus crisis, of course, reduced the value of companies slightly,” said Velič. Arca has hundreds of creditors.
Arca’s management claims that it is negotiating with an international investor who would enter the company and pay off its debts. Should insolvency proceedings take place, creditors will usually only recover a fraction of the money borrowed.
This would mean a shock for the Czech investment market, which would undermine investing confidence, similar to the crashes in the 1990s.