Business News

Receivership Proceedings Start at Vegrad

Celje/Velenje, 06 October (STA) - The Celje District Court decided on Wednesday to stop the debt restructuring procedures at insolvent builder Vegrad and launch receivership. Alenka Gril, who has been in charge of the debt restructuring so far, has been appointed the receiver. Creditors now have three months to file their claims.

Claims which have been reported during the court-mandated debt restructuring will also apply, the court said in a statement published on the web site of the Agency for Public Legal Records and Related Services (AJPES).

Vegrad's 633 workers, who have been on strike since 20 September over non-payment of wages, welcomed today's news, unionist Srecko Carter told the STA. Carter added that their future now depended on state institutions and welfare benefits. The workers' representatives were also received by President Danilo Tuerk today.

The remaining 400 workers of Vegrad's subsidiaries, who have not received their wages for months either, were meanwhile reserved, as their position remains uncertain. Carter said it would be up to the receiver to decide on the fate of these workers.

These and other steps, especially regarding the strike, should be discussed at a meeting of the strike committee on Thursday morning, he noted.

Also facing uncertain future are foreign workers, mostly from Bosnia-Herzegovina, who are entitled to some benefits from a state-run guarantee fund but are not eligible for unemployment benefits.

They are also having problems extending their work permits, as they cannot prove that they have sufficient income, Carter explained.

The Labour, Family and Social Affairs Ministry presented today a series of measures to help the workers who will lose their work permits. The government is expected to discuss the plan on Thursday.

The ministry proposes that the workers receive special counseling and assistance in the search for new employment, which might enable them to keep the work permit, Minister Ivan Svetlik said.

Those unable to find a job would get humanitarian aid to be able to return to their homeland and wait until an agreement between Slovenia and Bosnia-Herzegovina is implemented to grant them the right to payments form the guarantee fund or unemployment benefits.

Creditors called for Vegrad's receivership already in midsummer, but the court ordered debt restructuring on 1 September at the request of former CEO Hilda Tovsak.

The restructuring plan envisaged that creditors with unsecured claims, whom the company owed almost EUR 186m at the end of June, give up 80% of their claims and get the rest in the next four years.

Tovsak's successor Boris Medved meanwhile withdrew the proposal on 30 September, assessing that debt restructuring was not feasible.

The company got into trouble after a series of real estate developments which it financed on its own just before the housing bubble burst. For over a year it has been struggling to repay a mountain of debt, but it has been sinking lower and lower.

After banks blocked tits accounts, Vegrad could no longer pay its workers, suppliers and subcontractors and its management declared insolvency on 12 August. Vegrad's total debt amounted to EUR 241m at the end of June.

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