In the Czech Republic, a new bond case involving a large issuer of corporate bonds has fully erupted. It concerns the Premiot Group of businessman Ondrej Spodniak. In the case, which the editorial staff of SZ Byznys has been dealing with since January, the first insolvency proposals began to be filed by angry creditors.
Around 3,300 people put their money into the bonds of companies from the group. According to the latest available data from 2021, only Premiot obchodní, which was the first holding company to enter insolvency proceedings, has issued bonds for 734 million crowns. The liabilities of the entire group will probably be an order of magnitude higher.
“We are preparing insolvency proposals for other companies from the Premiot group. A number of our clients have claims against several companies, not only Premiot business, for which a proposal has already been submitted. We think that there is no other way to solve this matter than through insolvency,” said attorney Jan Langmeier from the Langmeier & Co. office, which represents some of the clients.
There is no information about the value of the holding’s property. In April, the head of the Spodniak group stated in the podcast of entrepreneur Milan Mahovský that Premiot has assets worth five billion crowns under management. But this claim cannot be verified. Premiot did not publish summary statements for the entire group. In addition, there are doubts among some creditors about such a value of the property.
The only thing that is certain is that one of the holding’s most valuable assets is one under construction apartment complex Skalka in Prague 5 and development project Karolína in Harrachov. The group already stopped the construction of both projects in February. The award also includes two slate and two granite quarries and a building plot in Budapest.
“Due to the very complex cross-commitments in the Premiot group, restructuring is expected to begin in the project companies, that is, in the owners of development and other projects. “Individual debtor companies will gradually be involved in the restructuring of the Premiot group, i.e. in particular issuers of corporate bonds,” the company said at the beginning of May.
The difficulty for investors in Premiot’s bonds lies precisely in the complicated structure of the group. There are a large number of companies here. A number of them were created only for the purpose of issuing bonds.
“The situation is quite dire for bondholders. As we ‘perceived’ the situation, individual issuers of bonds from the Premiot group do not really own any assets, only claims on other members of the group. In addition, there are dozens of issuers and most of them are below-limit bond issues. In other words, the issuers collected funds from investors and sent them on,” described attorney Tomáš Rada from the DRV Legal office representing one of Premiot’s creditor groups.
Premiot already indicated in April that he would file the bankruptcy petition himself. In the case of one of his companies, however, creditors overtook Premiot. Due to the large number of companies in the group, however, it is possible that Premiot will file an insolvency proposal for one of them on its own initiative, along with the reorganization plan. This can be important for the further development of the situation. This form of insolvency, which is called a prepackaged reorganization, leaves the debtor more room for maneuver.
The debtor can also propose his insolvency administrator as part of a pre-packaged reorganization. Which could subsequently become a so-called corporate administrator. This means that he would also be in charge of managing other bankrupt companies in the holding.
“The goal of the restructuring is primarily the protection of existing property values, the subsequent sale or completion of individual projects, thereby achieving maximum satisfaction for creditors,” the company previously told creditors.
However, some legal representatives of bondholders are skeptical of the reorganization proposals. “If Mr. Spodniak has been talking about the restructuring of the group since the beginning of the year, we think that these are empty promises, an attempt to delay the inevitable decline and an attempt to cover up the reality of the economy,” judge Langmeier.
“Regardless of whether there will be bankruptcy or reorganization, bond investors will only be satisfied in the second stage of the cascade. Creditors at the level of the given project company will be satisfied first, and investors at the level of the respective issuer only afterwards. How they will be satisfied, of course, depends on whether the funds from their issue went to one of those monetizable projects and for how much they will be monetized,” explained another representative of the Council’s creditors.
Premiot originally hired elite lawyers from the Havel & Partners office to resolve the situation even before the initiation of insolvency proceedings.
“In the end, Premiot Group’s Insolvency and Restructuring Group preferred another legal advisor. The Havel & Partners law firm currently provides the aforementioned client with some other partial legal services that are not directly related to the aforementioned area,” said Veronika Dvořáková, marketing head of the office.
Despite the current rapid development, Premiot still says it is working on a reorganization. It is also evident from the reaction of Premiot’s boss to the first insolvency proposal that Premiot’s relations with at least some of the creditors are at freezing point.
“Some speculative groups represented by lawyers, due to their impatience, do not realize that by filing an insolvency petition they are harming the ongoing negotiations and thus reducing the satisfaction of all creditors. They are demonstrably reducing and damaging the value of assets, which we will quantify,” said the owner of Premiot Spodniak.
Premiot’s financing was largely bond-based. A number of subsidiary companies in the group issued their own bond issues, mostly sub-limit issues. This is how the volume of bonds issued does not exceed the equivalent of one million euros. Such emissions are subject to almost no control. They don’t even have to have a prospectus.
An army of financial advisors primarily took care of the inflow of money into Premiot. Those interested in the bonds sought, for example, by phoning from call centers.
It was also an important part of Premiot’s marketing campaigns engagement of well-known personalities. Actor Petr Štěpánek has long been the main face of Premiot. For the year 2022, Premiot also had a contract with top tennis player Karolína Plíšková.
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