Wednesday, 23 April 2014

Prague court declares developer ECM bankrupt

11 February 2013

Prague, Feb 8 (CTK) - The City Court in Prague Friday declared debt-ridden developer ECM Real Estate Investments bankrupt after the biggest group of its creditors had asked for the withdrawal of a reorganisation plan, CTK has learnt from the insolvency register.

The bankruptcy was initiated by creditors who consider the move as "the only possible and suitable solution of the debtor's insolvency" with regard to the state of the company, according to a document in the insolvency register.

ECM has been tackling debts reaching billions of crowns for a long time.

The reorganisation proposal was submitted in August last year by creditor company Astin Capital Management Limited that represents holders of ECM's eurobonds worth around Kc3bn. However, the company withdrew the proposal on February 7.

The value of ECM's assets was put at Kc1.2bn in an expert assessment report in spring last year. The insolvency administrator earlier acknowledged creditors' claims worth Kc2.2bn.

However, the total volume of claims registered in the insolvency proceedings against ECM reached Kc9.5bn.

After the transformation of reorganisation into bankruptcy, the right to handle the company's assets is passing on to insolvency administrator and lawyer Ivo Hala.

According to Hala, the declaration of bankruptcy is not changing the situation of ECM very much.

"The process of converting assets into money will continue... For creditors, Friday's court decision is a way of getting their money back relatively fast," Hala said.

The insolvency administrator's team is now completing the sale of ECM's Chinese assets, namely a stake in the ECMall shopping centre in Peking which ECM owns via its subsidiary based in Hong Kong.

The second major unsold asset is a building lot in Prague's Pankrac district.

"After that (the sale) nothing will prevent me from starting to gradually pay out money to creditors," Hala said.

According to information available to CTK, creditors will receive about 20 up to 30 percent of their claims. Hala, however, refused to confirm this information.

ECM was founded by entrepreneur Milan Janku in 1991. It is known for designing and building high-rise buildings in Prague's Pankrac district, for example.

The developer said in January this year it had sold the shares of companies Epoque-Lancaster and Epoque Hotel that were project design companies for the construction of the high-rise buildings in Pankrac.

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