Unsecured lenders, losers of reorganisations

The reorganisation of insolvent companies and avoidance of bankruptcy are not necessarily a cause for joy for unsecured lenders of that company, because they do not stand much of a chance to recover their debts, considering that the categories of lenders favoured by reorganisation plans are banks, the employees and the state. So far, three reorganisation plans of companies with debts in the range of tens of millions of euros have been adopted. The plans target Flanco, Leonardo and Terra Vision (the developer of Terra Residence in Voluntari, which had over 120 million euros in cumulated debts to unsecured lenders.
In the case of Flanco and Leonardo, judicial administrators made an evaluation as part of the reorganisation plan, and the majority of lenders voted against payment of debts to this category of lenders. On the other hand, clients of Terra Vision, who made a downpayment for apartments in the Terra Residence project, are set to receive 60% of the debt owed to them, but construction works for the residential complex have yet to start, so the money is frozen for the time being.
“We were cheated out of our money, and then it was made legal,” says one of Leonardo’s unsecured lenders, who continues to work with the footwear retailer.