The reorganization plan of listed Estonian garment manufacturer and retailer Baltika has been accepted by creditors after a vote, Baltic News Service reports. Baltika had been experiencing financial difficulties even before the coronavirus pandemic broke.
On March 27 2020, Baltika announced of submitting a reorganization application to Harju County Court; the court had on the previous day decided to commence reorganization proceedings, Baltika told the Tallinn stock exchange.
On April 30, 2020, Baltika announced its submitting of the reorganization plan prepared during the company's reorganization proceedings, for acceptance by the creditors. Baltika also published a summary of the plan. The creditors were asked to cast their vote on the reorganization plan, no later than May 20 2020.
Baltika's successful restructuring will enable the company itself, as well as its subsidiaries, to continue business activities, and to preserve numerous jobs in Estonia, Latvia, and Lithuania, Mae Leyrer, member of the management board of Baltika said.
Baltika's temporary payment difficulties and liquidity problems were the result of the global COVID-19 crisis and its inability to meet obligations arising from exiting production activities, according to the company.
Based on the reorganization plan, creditors were in two groups, and the voting, therefore, took place in two groups as well. Two thirds of creditors in the first group voted in favor of the plan, and the votes determined based on the volume of claims accounted for almost 100 percent of all votes in the first group.
Of the creditors in the second group, just under 83 percent voted in favor, and the votes determined based on the volume of claims accounted for just under 70 percent of all voters in that group.
According to the Reorganization Act, a reorganization plan will be accepted if at least half of all creditors who hold at least two-thirds of all the votes, that is by volume of claims, vote in favor. If creditors are divided into groups as with Baltika, this requirement must be met in all groups.
Baltika will submit the reorganization plan accepted by the creditors to the court for approval no later than on May 25 2020. Any creditor who voted against the plan has the right to apply for refusal to approve it, BNS reports.
The court will decide on the approval of the reorganization plan within 30 days after the receipt thereof, by assessing the fulfillment of different procedural requirements and other aspects deriving from Estonian law. The ruling to approve the plan can be disputed by a creditor; the ruling by which the approval of the plan is refused can be appealed by the company.
If the court decides to approve the plan, Baltika will start to enforce the measures described in the plan, including paying debts that have been included in the plan according to its schedule.
As reported on ERR News, Baltika announced in November it was to cease its production in Estonia, leading to 300 layoffs in the Lasnamäe district of Tallinn and in Ida-Viru County.
Baltika Group operates a chain of clothing stores in the Baltic States and other countries, and is behind the Monton, Mosaic, Baltman, Bastion and Ivo Nikkolo brands.
Editor: Roberta Vaino