Váhostav-SK threatens with bankruptcy proceeding if restructuring suspended

THE SLOVAK government will attempt to interrupt the ongoing restructuring of the Váhostav-SK construction company which should be concluded on April 30, Prime Minister Robert Fico announced after a working meeting with representatives of the self-employed and construction companies at Government Office on April 18.

Marián Moravčík, CEO of Váhostav-SKMarián Moravčík, CEO of Váhostav-SK (Source: SITA)

Váhostav-SK is trying to resolve its dire situation by restructuring, but while banks and big debtors get full amounts of their due sums, small creditors shall receive a mere 15 percent of the sums the firm owes them. This, although it is the usual procedure when companies are restructuring, caused uproar among the small creditors, mostly self-employed, as well as the wider public.

The government initiated a parliamentary session meant to amend the law on restructuring, striving to change the current state of matters. However, it suspended the process of approving the amendment in order to recall the deputy speaker of parliament and chairman of the opposition Christian-democratic Movement, Ján Figeľ, who was transport minister during the time the unrealistically low prices of bids for highway tenders were signed which brought the company down. This process has postponed the passing of the amendment – and it may not be passed before the April 30 deadline. Thus, the government announced it would interrupt the restructuring, the Sme daily wrote.

Read also:Fico seeks to blame Figeľ for VáhostavRead more 

If the restructuring process of Váhostav-SK is prolonged, it will be devastating for the company, its general director Marián Moravčík said in reaction. “Let this company finish its restructuring. As soon as the restructuring is interrupted, it will be the end ... it will be irreversible,” he said, as quoted by the TASR newswire. “This is neither a war, nor blackmail [what I’m saying] - it’s reality,” he concluded.

Should creditors, at a meeting on April 30, approve the restructuring plan, a court will then have 15 days to decide on the matter. Váhostav-SK - a company with 1,500 employees – will not survive more than two months if the restructuring is interrupted, Moravčík also stated, adding that he himself will then file for the company’s bankruptcy.

If Váhostav-SK ends up in bankruptcy, loss-making motorway construction commissions will be late – including the D1 motorway stretch between Dubná Skala and Turany which is expected to produce a total loss of €27.5 million for Váhostav, and the Jánovce-Jablonové stretch representing a loss of €500,000, he added.

The new rules proposed by the ruling Smer party shall bring the payment of 15 percent of the due sum for small creditors over a period of five years, and then would be able to ask the distrainment administrator for the remaining 85 percent. This is a crucial change which will challenge the very sense of restructuring, as the company which will undergo the process will have to pay the whole amount of money as if it did not even undergo the restructuring. Smer also wants the change to be retroactive, Sme wrote. It will not impact cutting the debts only for Váhostav-SK, but also for 50 other companies that are currently undergoing restructuring. They will be left with two possibilities: either they will go bankrupt, or make a deal with creditors that they will prolong the due date of invoices.

The latter possibility which does not include the debts being reduced, however, should not be enough for firms: some may go bankrupt anyway, said lawyer and restructuring administrator Jozef Griščik. Also, Renatus Kollár of Allen & Overy law firm says that the new rules will result in companies losing motivation to continue in restructuring. Thus, the new amendment may help the small creditors of Váhostav, but harm many other companies now in the process of restructuring, Sme wrote.  

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