Following almost a year of speculation as to whether the Czech developer ECM would be declared bankrupt, or given a chance to restructure, the Prague Municipal Court has decided on the latter. Astin Capital, which represents a group of holders of ECM’s Eurobonds with a face value of over Kč 3 billion, has been given 120 days to present a restructuring plan. If it fails, individual creditors including ECM itself will be given a chance.
In the Czech Republic, developer ECM is best known for its large multi-functional City Pankrác project, but the its portfolio also includes a diverse range of assets in the Czech regions, Poland, Russia and China. On July 20, ECM’s creditors voted to send the company into liquidation. According to the insolvency administrator’s report, as of July 18 the company’s assets were worth Kč 3.3 billion.
Bankruptcy rather than restructuring was the verdict of a creditors' committee meeting over insolvent property developer ECM. The final verdict was not surprising given that the biggest group of creditors from international financial institutions who were backing restructuring were not allowed to take part in the vote. They have vowed to fight he commitee decision with the ECM saga far from over.
The fate of the insolvent property developer ECM will be determined on Wednesday, August 20; the company’s creditors are calling for the restructuring of the firm but the appointed insolvency administrator, Ivo Hala, is rejecting their demands. What’s at stake is not “just” the debts, but the very existence of ECM. Some observers say that if the rights of creditors aren't recognized the company will be declared bankrupt.
Debt-burdened Czech real estate development company ECM REI often hit the headlines for its spectacular, some would say monstrous, high office block projects. But it has become increasingly clear in recent years that the company had weak financial foundations, with creditors now faced with the choice of sending it into reorganization or bankruptcy.