Creditors will decide on the solution to the debts of the developer ECM on Tuesday

CITY Project at Pankrác Plain

Prague - On Tuesday, a creditors' meeting will once again decide the fate of the indebted development company ECM Real Estate Investments (ECM) at the Municipal Court in Prague. The insolvency administrator is proposing the declaration of bankruptcy again, while ECM's management aims to push for reorganization. This was revealed by ČTK from documents published today in the insolvency register on the justice.cz server.
    The company has been in bankruptcy since July, but the High Court in Prague annulled the bankruptcy decision in October due to procedural errors.
    Milan Janků, the chairman of the board and CEO of ECM, originally advocated for the reorganization of the company, but failed in July. Now, he is presenting creditors with a proposal for a new "roadmap" that aims to help save the developer through reorganization. This proposal includes the creation of a new management structure at ECM. Current executive board members Janků and Antonín Jakubše would move to the newly created supervisory board of the company, and a hired real estate manager would become the chairman of the board at ECM. According to today's published material, this could be either Anton Hopfgartner from Property Solutions or the head of the Crestyl development group, Omar Koleilat.
    While the overall yield of unsecured creditors from the reorganization would be around 54.5 million euros from the sale of projects and assets, approximately 1.4 billion crowns, in the case of bankruptcy, it would reportedly be 39.3 million euros (around one billion crowns).
    However, ECM's insolvency administrator Ivo Hala still insists that the best solution for the indebted company is bankruptcy. "The bankruptcy solution seems more advantageous as it offers higher satisfaction for creditors in a shorter time frame," quotes the insolvency administrator in the document published today, citing a statement from the consulting firm PwC. According to Hala, reorganization would require an influx of new money into the company, which is practically impossible in the current situation.
    The insolvency administrator of ECM is also leaning on a decision made last week by a court in Hong Kong, according to materials published today. ECM holds a stake in the ECMall shopping center in Beijing through a Hong Kong-based company. The Hong Kong court has now sent ECM into bankruptcy.
    If the creditors' meeting on Tuesday again sends ECM into bankruptcy, Janků is prepared for a new court appeal. "Another round of court disputes would have a negative impact on the process of selling ECM's projects and assets, with an expected three-month delay until the appellate court issues another decision. Any delays in the sales of projects and assets amidst uncertainty in the Eurozone and Czech markets and the ongoing financial crisis are not in the interests of creditors," stated ECM's managers in their materials for creditors.
    The reorganization of the real estate firm is also being advocated by Astin Capital Management, which represents a portion of bondholders. It has filed the largest claim in the insolvency proceedings against ECM, amounting to approximately 3.1 billion crowns. However, the insolvency administrator Hala did not recognize Astin Capital's claim. Creditors advocating for bankruptcy in July included Česká spořitelna and Glancus Investments from the PPF group.
    ECM is known mainly for its high-rise building projects in Prague at Pankrác. The company was founded in 1991 by entrepreneur Janků, who currently leads the firm.