Pan – the company of ‘the Croatian king of paper’ Marinko Mikulić facing bankruptcy

The Commercial Court in Zagreb has issued a decision initiating preliminary proceedings to determine the conditions for opening bankruptcy proceedings against Pan – Paper Factory Zagreb, a company founded and long directed by entrepreneur Marinko Mikulić.

The court has called on the representatives of the company to submit a list of assets and liabilities of Pan within eight days, with a confirmed debt of just over four million kuna. A court hearing has been scheduled for May 15 to respond to the proposal for opening bankruptcy proceedings, to which representatives of the distressed company, representatives of the Financial Agency (Fina), and representatives of Erste & Steiermarkische Bank, Privredna Banka Zagreb, and Croatian Postal Bank have been invited.

The court’s decision followed Fina’s proposal in January to open bankruptcy proceedings, which stated that the company had unfulfilled payment obligations for a period of 193 days and a total amount of four million kuna at the end of December 2017. In that proposal, Fina emphasized that, according to the submitted data, the company has 118 employees, term deposits, and open accounts in three commercial banks, and that, in addition, Fina “does not have any other information about the assets of this debtor.”

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The proposal to open bankruptcy for Pan – Paper Factory Zagreb followed a pre-bankruptcy settlement confirmed in May last year, in which 90.6 percent of creditors with a total of several hundred million kuna in confirmed claims accepted the financial restructuring plan.

In that plan, confirmed by Fina, significant write-offs of the accumulated debts of the company to creditors were accepted, namely the write-off of default interest and 30 percent of the principal debt, after which the debt would be repaid in 84 installments, with a one-year grace period from the acceptance of the pre-bankruptcy settlement.

In this way, the claim of the Tax Administration against the company, amounting to as much as 31 million kuna, was “reduced” to 13.85 million kuna, and similarly, three claims from companies within HEP, totaling nearly 36 million kuna, were reduced to about 21.5 million kuna. Debts to Croatian Waters, as well as to Zagreb Water Supply and Drainage, totaling more than 16 million kuna, were more than halved; under the accepted financial restructuring plan in the pre-bankruptcy settlement, this debt was “reduced” to 6.8 million kuna.

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As the largest creditors of Pan – Paper Factory Zagreb and with the largest number of votes in accepting such a restructuring plan, two related companies were listed – Pan Paper Industry Trgopromet d.d. in bankruptcy, registered in Đakovo, which claimed 371.4 million kuna, and Pan Paper Industry Cardboard and Cardboard Packaging Factory d.o.o in Zagreb, which claimed the same amount but is registered at the same Zagreb address as the “parent” company Pan – Paper Factory Zagreb.

Pan – Paper Factory Zagreb, whose CEO until August 2015 was Marinko Mikulić, dubbed the “Croatian king of paper” in the media, employed nearly 500 workers and was profitable until 2012. However, the following year, a loss of nearly 171 million kuna was reported. In 2013, the “parent” Pan – Paper Industry owed as much as 151 million kuna according to the list of tax debtors from the Ministry of Finance.