Proposal of the compulsory settlement confirmed by a majority of creditors

Based on call issued by the court seised in the compulsory settlement procedure against the company LIVAR, d.d., the creditors had the opportunity to vote on the confirmation of the compulsory settlement proposal until 21 January 2021.

As follows from the petitioners’ report dated February 4, 2021, 45 creditors voted FOR the compulsory settlement proposal, what accounts to a total of 81,8% of all voting rights, while only 1 creditor voted against it. The prescribed majority for voting in the compulsory settlement was therefore reached and even considerably exceeded (the threshold is defined by 6/10 of all voting rights). Furthermore, 14 creditors decided to transfer their claims in the total amount of EUR 5,1 million (representing 21% of the company’s total debt) into the company’s equity. The latter creditors will become new shareholders of the company upon final confirmation of the compulsory settlement (whereby the current shareholders will lose their shareholder rights since the company was not able to repay its creditors in full).

 Normal course and completion of the compulsory settlement procedure is however being disrupted by the controversial actions of a small group of creditors and individual shareholder, who are regularly filing various ungrounded objections and complaints in the compulsory settlement procedure, such as requests to change management of the company and the compulsory settlement administrator as well as the request on exclusion of a creditor petitioner from the Ordinary Creditors’ Committee. While doing so, they misleadingly and untruthfully claim that their activities will ensure greater repayment of ordinary creditors, when in fact their activities are aimed only at prevention of the successful execution of compulsory settlement and initiation of bankruptcy proceedings. The respective minor creditors have not even used the opportunity of the compulsory settlement procedure for conversion of their claims into equity of the company, what clearly indicates that in fact they do not support the company nor believe in its greater value, even though they misleadingly claim accordingly. Thus, the real purpose of their conduct is clearly causing damage to the company and preventing its successful financial restructuring.

The administrator of the compulsory settlement also pointed out the above-mentioned abuses of procedural rights by a small group of creditors in his extraordinary report dated 2 February 2021. The court of first instance preliminary declared resolution on the capital increase adopted by the Secured Creditors’ Committee as invalid, however it is expected that the High Court will reconfirm respective resolution or replace it with recognition of the alternative resolution on capital increase adopted by the Secured Creditors.

With expected confirmation of the compulsory settlement proposal, as voted by vast majority of creditors, we look forward to successful completion of the procedure within following months, which will enable further company’s business growth and refocus on its core business. The respective unfair actions of minor group of creditors and individual shareholder have contributed to the unnecessary prolongation of the procedure, however we strongly believe the court will shortly resolve all the appeals and finally approve the compulsory settlement proposal.