Commercial Court in Zagreb Passes Ruling on Verified and Contested Claims of the Agrokor Group
Jan 16, 2018
Yesterday the Commercial Court in Zagreb passed a ruling on verified and contested claims of Agrokor d.d. creditors, published at the Court's e-bulletin board available at the link https://e-oglasna.pravosudje.hr/?q=stecaj/9934.
The Ruling states that further to the claims investigated and verified by the Extraordinary Commissioner in the amount of HRK 41.45bn and contested in the amount of HRK 16.43bn, the creditors have mutually contested claims in the amount of more than HRK 10.4bn. Guarantees and co-debtorships contested by other creditors exceed the amount of HRK 101 billion. The total sum of verified main claims for the time being, prior to the completion of civil court proceedings, thus amounts to HRK 31,043,173,116.50.
The Commercial Court Ruling sets forth which claims have been verified and which contested by the Extraordinary Commissioner and other creditors and the Commercial Court referred the parties to civil proceedings in order to verify or contest the contested claims.
Amongst the parties contesting claims and guarantees of other creditors are the following creditors: Adris Group, Alca Zagreb, D.M.H. , Ricardo, RCB Bank Limited, Sberbank, VTB Bank AG, VTB Bank AG, VTB Bank SA, VTB Capital PLC, Feniks Radnička, Bebra, Agram Invest, Agrolaguna and Euroherc osiguranje, and it is also clear from the Ruling that Adris Group d.d., Sberbank of Russia and VTB Group have withdrawn their mutual contestations.
In case the claim has been contested by the Extraordinary Commissioner, the Court referred the creditor to civil proceedings in order to establish the merits of the contested claim. In case a creditor has contested a claim previously verified by the Extraordinary Commissioner, the Court referred such creditor to civil proceedings in order to establish the status of the contested claim and if for the contested claim there is a deed of foreclosure, the Court referred the contesting party to civil proceedings to prove the merits of the contestation.
Complaints against the Commercial Court Ruling can be filed within 8 days. The right to complain is held by each creditor with regards to their claims filed, i.e. claims contested by the Extraordinary Commissioner. Such complaints will be decided upon by the High Commercial Court of the Republic of Croatia.
Furthermore, a person referred to civil proceedings has to institute such proceedings within 8 days as of the ruling on referral to civil proceedings becoming legally valid, otherwise it will be considered that such person has waived the right to bring civil proceedings. If a party contesting a claim for which there is a deed of foreclosure in place does not institute civil proceedings within 8 days, such contestation will be considered to be renounced.
Within five days as of delivery of the Ruling on Verified and Contested Claims, such Ruling considered to be delivered within 8 days as of its publication, the Extraordinary Commissioner shall invite creditors whose claims have been verified to inform the Extraordinary Commissioner and the Court of the Creditors' Council Members within 30 days. In case a creditor group should not appoint its Member to the Creditors' Council within 90 days as of the publication of the Extraordinary Commissioner's invitation, such Creditors' Council Member shall be appointed by the Court upon proposal of the Extraordinary Commissioner within 8 days upon expiry of the aforesaid period of 90 days.
The Commercial Court Ruling consists of 636 pages, out of which more than 400 pages contain tables with verified and contested claims.
In the Rationale of the Ruling the Commercial Court in Zagreb has amongst other things stated that the case of Agrokor and the Extraordinary Administration constitute a legal situation unprecedented in the practice of bankruptcy proceedings. According to this Rationale, this is a specific extraordinary administration procedure involving 77 companies and their assets which constitute a common bankruptcy estate from which the creditors will finally recover their claims by way of settlement in accordance with the Extraordinary Administration Act and not by distribution after the assets have been converted into cash, as stipulated by the Bankruptcy Act. The Rationale further explains that in this completely new legal matter in the Republic of Croatia the Commercial Court considers it necessary to protect the rights and interests of each of the individual creditors of the debtor and each related and subsidiary company, while at the same time achieving legal security in such way as to avoid favoring individual creditors against others, favoring in voting and favoring the recoveries of claims of those creditors who have secured their cash claims by joint and several guarantees and co-debtorships, under the conditions of conducting one single and unique extraordinary administration procedure with the final goal of recovering the claims of all creditors by settlement in line with the bankruptcy plan provisions from the bankruptcy proceeding.
In particular, the case in point is an extraordinary administration procedure over 77 companies with more than one debtor for one and the same claim – main debtor and at the same time a few joint and several guarantors or co-debtors. „We are dealing with intertangled legal relations between entities subject to the Extraordinary Administration procedure and their creditors, where the creditors have filed claims against one of the debtors as main debtor and at the same time against several of its guarantors and co-debtors, which guarantors or co-debtors ar also main debtors to other creditors while the joint and several guarantors or co-debtors for these are the aforesaid main debtors to the previously mentioned creditor“, the Rationale explains, noting that even in such situations the basic rule of the Obligatory Relations Act and the Bankruptcy Act, prohibiting the multiple recovery of one and the same creditor claim, is not excluded.
The Court holds that the Extraordinary Commissioner has correctly stated the guarantors and co-debtors along with the main debtor. In particular, it holds that the claims arising from guarantees and co-debtorships, once the claim from the main debtor has been verified, are also considered to be verified, but without voting right and without the right to recovery which would exceed the amount of the claim against the main debtor, while in cases where the claim from the main debtor has been contested, it is considered to also be contested with regards to the guarantees and co-debtorships.
The Court also points out that by this Ruling it has not decided upon the specific voting rights to be exercised by the creditors in voting on the acceptance of the settlement, which will be done together with the list of creditors at the hearing, nor has it decided on the specific recoveries for the creditors, which will depend on the settlement voted upon, to be prepared by the Extraordinary Commissioner together with the Creditors' Council. By this Ruling the Court has primarily decided on the verified creditor claims which have not been contested by either the Extraordinary Commissioner or other creditors, or those for which a stated contestation has been renounced, as well as on referring creditors to civil proceedings in order to establish their claims or to establish the merits of contestations.