Croatia osiguranje and the state against the proposed method of selling Name

Croatia osiguranje (CO) as a secured creditor explicitly opposes the proposal to sell the real estate of Name in Ilica, Zagreb, with the obligation to retain activities and workers for at least two years, according to CO’s statement ahead of the creditors’ assembly scheduled for September 18.

– The conditions for the sale of this property, which impose on the buyer the obligation to take over workers and continue business activities for a period of at least two years, clearly indicate that this is not about monetizing real estate in accordance with the provisions of the Bankruptcy Act, but about selling property that, in addition to real estate, includes movable property, with additional obligations to the buyer that clearly reduce the value of that property – states CO’s statement.

It is also emphasized that from the mentioned proposal, it is not clear whether the sale of real estate will satisfy secured creditors or whether the real estate is sold to the buyer encumbered with secured rights.

– There is no mention of satisfying secured creditors even in the report of the bankruptcy trustee in which he presented the proposal to adopt such a decision on the sale – states CO’s submission.

CO: Real estate encumbered with mortgage claims of over 40 million euros with interest

It is added that the proposal of that decision envisages a different method of selling the real estate of the department store Name at Kvaternik Square and the real estate representing the department store in Ilica. For the department store at Kvaternik Square, the sale is determined by collecting and opening bids, while for the department store in Ilica, the sale is determined through a public judicial auction.

– Thus, the same buyer does not have to buy both department stores as an economic unit, but it is possible or likely that these department stores will have different new owners – it is emphasized in the submission and concludes that the proposed decision on the sale is not in the interest of any group of creditors.

– Due to the conditions imposed on buyers, selling economic units will achieve a significantly lower price than selling real estate. Moreover, if the buyer takes over real estate encumbered with mortgage claims that, according to the report of the bankruptcy trustee by December 31, 2023, with interest exceed 40,000,000 euros, it is clear that the buyer for the department store in Ilica will not offer much more than 1.00 (one) euro – concludes CO, also raising the question ‘in whose interest is the sale of property as proposed by the bankruptcy trustee.

CO’s submission was published after the state also submitted a statement to the court that it does not agree with the collective sale of the department store and real estate of Name in Ilica, Zagreb, at a joint public auction.

– The secured creditor, the Republic of Croatia, the Ministry of Economy – Directorate for Commodity Reserves, does not agree that the subject real estate is sold together in a single joint public auction if such a sale cannot achieve the collection of claims from the bankruptcy estate, based on the secured rights of the creditor of the Republic of Croatia – it is emphasized in the statement of the County State Attorney’s Office representing the state.

Sale initiated last December

The statement followed after the conclusion of the Commercial Court in Zagreb, which invited the state to state whether it agrees to sell the building, courtyards, garden, and park of Name at Ilica 4 – 6 and the wall at Radićeva Street 1 at a joint public auction.

The sale of Name’s real estate was initiated after Croatia Osiguranje’s request for a trial within a reasonable time was established last December, more than 23 years after the opening of bankruptcy, and a decision was made that the sale of buildings in Ilica and at Kvaternik Square must be made within nine months.

In the shadow of the convening of the creditors’ assembly, the bankruptcy trustee Damir Mikić submitted a report in which he emphasizes that, considering the ownership and land registry status of the remaining real estate and that business activities are still being conducted in both department stores and workers are employed, “it would be opportune to make a decision on the sale of the property as a whole.”

That is, that the real estate and movable property of Name be sold together and that the buyer be obliged to take over the business and stock of goods and the workers found on site for a certain period, and that is at least two years. In the court conclusion, it is stated that the sale will be conducted through a public judicial auction in accordance with the bankruptcy law and with the appropriate application of the enforcement law.

The starting price will be determined according to the assessment of the court expert for real estate and according to the book value for the equipment of movable property, it is emphasized in the conclusion.