Liquidation of a company is mostly carried out in Croatia in cases where the company exists only on paper for some time, and its founder or founders get tired of accumulating unnecessary costs of its maintenance. In a smaller number of cases, a founder without an heir, who does not want to sell the company, decides to retire. Even rarer are cases where multiple founders, due to an inability to reach mutual agreement on how to run the company, decide to part ways and divide the assets in liquidation. The rarest cases are when founders initiate liquidation to save the company from the impending collapse. In such cases, however, it is essential to create conditions during the liquidation process that will allow for continued operation before the process is completed.
This is exactly what the Krapina-based Kotka has done. According to all indications, the operation has succeeded, and the company has survived. Moreover, last year it achieved nearly 350 thousand euros in profit, which, considering that it is a textile industry primarily living off subcontracting work, is more than a respectable result and one of the best results in the company’s history.
No sales, no production
The coronavirus crisis particularly affected the textile industry, including Kotka, a manufacturer and exporter of men’s suits. Stores across Europe were repeatedly closed for several months during 2020 and 2021, and even when they were open, the demand for quality men’s suits was much weaker than usual. There were no business meetings or various ceremonial events, so new suits were not needed by men. Kotka’s customers, who found themselves in significant trouble, canceled new short-term and long-term orders and hinted that further cooperation was more than questionable.
The situation, over which Kotka had no influence, brought great uncertainty to the Krapina company, whose operations are entirely dependent on the employment of production capacities. In previous years, there had been sporadic cases of order cancellations, but Kotka’s strength lay in not relying on just one customer, which minimized the risk of capacity employment. However, under pandemic conditions, the company suddenly had 70 percent of its capacity completely canceled and was left with one customer, which had already become unsustainable in the short term, regardless of the state aid it received to maintain jobs. All other operating costs, however, could only be covered by the employment of production capacities, but that was not available.
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