Creditors of real estate company ECM who questioned a bankruptcy declaration concerning it citing procedural errors have won a partial victory. The High Court, in a ruling on October 14 but only publicized later, said that various mistakes were made in the original declaration, including the fact that the court did not deal with the proposal for the developer to be allowed to reorganize itself as proposed by the company itself and one of its biggest creditors, Česká spořitelna.
Another point which angered creditors, the refusal of the insolvency administrator Ivo Hala to recognize claims from eurobond holders totaling more than Kč3 billion had been upheld by the municipal court. This meant that the holders of the eurobonds will not be able to vote on the fate of ECM at a meeting of creditors. But the High Court called for a new creditors’ meeting to be held at which voting rights would once again be discussed.
ECM was founded in 1991 and enjoyed a flourishing first 17 years. The real estate crash and credit squeeze of 2008 were a severe shock. The developer, famous for its tower blocks dotting Prague suburbs, appeared to have been rescued when the PPF investment group bought a large stake in the business and created a development joint venture. But PPF later turned round and became the main champion of ECM’s bankruptcy.