The Battle of Matras ended in a fiasco
The second largest network of bookshops, after the restructuring proceedings have been discontinued, does not have the assets to cover the costs of the bankruptcy proceedings. Friday 3 August 2018 The bankruptcy court in Warsaw dismissed the motions of the debtor and creditors to declare bankruptcy.
In the course of the remedial proceedings, the Company’s revenues were constantly falling, and the network did not pay its contractors their due fees. As a result, Matras’ liabilities increased by several million and the restructuring proceedings were discontinued in August 2017. The decision in this matter became final and binding only in June 2018, allowing the creditors to satisfy their claims from the funds in the Company’s accounts. The bankruptcy court could hear motions for declaration of bankruptcy after the decision on discontinuance of remedial proceedings had become final.
Along with the motions to declare Matras bankrupt, the Court in Warsaw received the motions to conduct bankruptcy proceedings under the so-called pre-pack procedure. The court dismissing the above mentioned applications indicated that the proceeds from the sale of the enterprise (PLN 738 thousand or PLN 960 thousand) will be too low in relation to the expected costs of bankruptcy proceedings (PLN 3.3 million).
As a result of the Court’s decision, only creditors with a registered pledge on the Company’s assets and employees who obtain funds from the Guaranteed Employee Benefits Fund have a chance to obtain at least a part of their receivables.
The existing situation indicates a practical problem related to the lack of protection of the debtor’s assets in the period between the discontinuance of restructuring proceedings and the declaration of bankruptcy. A possible solution to the above problem is filing with the bankruptcy petition a motion to secure the debtor’s assets by suspending the enforcement proceedings and repealing the seizure of the bank account.