Sombor-based Zastava promet avoids padlock - Reorganization plan of the company with a debt of EUR 5,8 mil adopted

("Zastava promet")

Although the company stepped into 2000, with 370 employees,Sombor-based Zastava promet this year has only twenty one. Moreover, the company went bankrupt.

The company debts for vehicles turnover and maintenance total EUR 5, 8 mil (RSD 656 mil).

However, a padlock will not be placed because the company reorganization plan has been adopted. The proposer of the reorganization plan is the owner of Obrenovac-basedZastava prometa- koncern Srboexport d.o.o.

Practically, trustees who expect debt settlement are grouped into four classes: Class A comprises secured trustees (Komercijalna banka, dealership Vozdovac, an investment fund Fokus premium and broker house Citadel securities). Zastava owns some million euros to them. Class B comprises trustees who did not receive net salaries , pension and health taxes and contributions (debts of RSD 4,3 mil). Class C comprises Tax administration and local self-governance of Kula and Subotica with a debt of1,2 mil dinars. The last class D comprises non secured trustees with a debt of RSD 515 mil.

What the Plan, eKapija saw, implies is that the company will be reorganized by combination of sales of charged property in order to settle secured trustees and reprogram of debts of D class trustees. Also, debt aquittance of 75% is planned for unsecured trustees as well as sales of one part of unburdened property of the company in bankruptcy but also, investment in new business capacities are planned.

As the Plan developed by the consulting company, WM Equity Partner,implies, trustees of B and C class will be paid before the Plan implementation starts. Debts towards secured trustees will be settled from sales of property within 2 years. Unsecured trustees should receive their funds within 5 years maximum. Interest rate totals 0,2% with a two-year grace period.

Underhammer

Facilities in Sombor will go on sale: sheet metal workshop (estimated market value totals some EUR 54.000 EUR), headquarters and vehicle service (estimated at EUR 1, 23 mil) and another headquarters building on 909m2 estimated at EUR 294.000. Then, a boiler room in Sombor on 2. 832 m2 estimated at EUR 400.000, as well as two office space buildings in Subotica will go under hammer.

In Kula, the technical service department, a service hall and connection annexes will be offered for sale which should generate some EUR 333.000. Also, debtor will offer business services building in Vrbas, totaling some EUR 18.000.

Sales of property should generate total of EUR 2, 44 mil.

WM Equity Partners say that the reorganization is far better solution than bankruptcy because the company in bankruptcy goes out of bankruptcy as financially restructured entity, continues business activities,employs people and pays taxes and contributions.

Plan to exit crisis

Nemanja Nikolic, legal adviser in WM Equity Partners, says that within two years as of the Law on Bankruptcy came into force, companies undergoing financial difficulties mostly considered reprogram of debts sufficient measure to solve them, hoping that the crisis will not last for long and that they will be able to service its obligations from its business. This resulted in so called sanation plans of reorganization firstly based on changes of due dates and debt payment deadline.

- However, since the burden of liquidity in the Serbian economy was becoming more difficult, debtors and trustees realized that real organization cannot be based only on simple redefining of due dates. Therefore, recently, we can see more and more liquidation plans of reorganization which include measures such as liquidation of one part of property in order to settle debts and similar measures (examples: Telefonija, Beotel, WMW, Poljopromet...), – Nikolic says, adding that the Zasatavapromet reorganization plan is based on the same presumptions.

- Trustees of the company realized it will be more convenient if they sell a part of the property so they supported the proposed plan. Since it is non-core property, a debtor will solve high cost problem for the property maintenance which does not have important role for core activity – Nikolic concludes, stating that Zastava will see better days.

Nemanja Nikolic

From workshop through giant to bankruptcy

Zastava promet has the same destiny as almost any giant in . Namely, beginnings go back to 1958 when the trading company for motor vehicles, spare par5ts and wholesale electric and technical material sales, Autobacka.In 1962, Autobacka became direct distributor of Kragujevac-based Crvena zastava Bureau and as of July 1971, it integrated into the Crvena zastava Bureau Thus, the dynamic development stage began featured by constant sales network expansion and shops opening in other cities in Vojvodina(Novi Sad, Vrbas, Senta, Kula, Novi Becej, Becej i Odzaci). After that, changed several times organization an name.

In the first year of business activities, eight people were employed. Over the time, with an increase in business operations scope, from as mall shop, the company grew into modern sales and service company with up to 370 people, which was the number in early 2000.

The scope of work was slowly decreasing and thus the headcount as well. Today, the company employs only 21 people. The company accounts have been blocked as of January 24, 2011 until today and it occurred when the Tax administration and other trustees carried out forced payment.

Jelena Djelic