How close is the end of insolvency?

Only two of the 11 companies with tens of millions of euros in turnover, which the crisis pushed into insolvency in 2009, have managed to pass the first milestone – the approval of the reorganisation plan by the creditors. But how close are Flanco and Leonardo to coming out of insolvency?

A company can go from reorganisation to coming out of insolvency in three or four years’ time, but retailers betting on the survival of their business want to speed up the process in order to regain suppliers’ confidence, say insolvency experts.
The Flanco home appliances store chain, put up for sale by creditor banks, could make insolvency history as the fastest recovery of a business worth tens of millions of euros. The company has recently announced that its reorganisation plan, which provides for exiting insolvency in a maximum of six months, has been voted for by the creditors. Until full recovery of the business, which in fact amounts to coming out of insolvency, the company needs to repay all its debts, as committed to under the reorganisation plan, and keep from accumulating new debt, say insolvency experts.
“In Flanco’s case, it all depends on whether the reorganisation plan is observed or not and on how viable it is. It is also important for the company to have sufficient working capital,” says Arin Stănescu, president of the National Romanian Association of Insolvency Practitioners.
The plan of the home appliances retailer provides for a 4 million-euro capital injection, after a new investor strong on liquidity joins the shareholder structure, with the transaction to be finalised in a few weeks’ time.