In 2017, Estonians Eerik Oja and Marten Orgna founded Inclusion OÜ, a company offering car rental services under the brand name Planet42.

The company began by purchasing cars in South Africa for individuals who were unable to secure loans from local banks. In 2021, the company expanded to Mexico.

Over its seven years of operation, the company raised nearly €115 million, securing tens of millions of euros in unsecured loans from investors.

Despite its efforts, the company never turned a profit in any given year.

In 2023, the company reported a turnover of €32.9 million but suffered a loss of €20.3 million. According to its financial report, the company had liabilities totaling nearly €97 million, while its assets were approximately €11 million less, standing at €86 million.

At the end of July, the company announced financial difficulties and the suspension of loan repayments.

On Thursday, the company's CEO, Eerik Oja, informed investors that he had filed for the reorganization of Inclusion OÜ.

"After analyzing various scenarios, we have concluded that, legally, we currently have two options: either file for bankruptcy or seek reorganization," Oja stated, adding that a bankruptcy filing would be the worst option for investors.

"Considering the destructive impact bankruptcy would have on Planet42's business and its creditors, we chose reorganization and submitted the relevant application to the court today, August 15. Over the next 60 days, we plan to present a comprehensive reorganization plan to the court, which will require several important steps. Among other things, we need to negotiate the rescheduling and reduction of loans. For the court to approve the reorganization plan, we also need the support of subordinated lenders, as each subordinated lender who directly invested in Inclusion OÜ will have the right to vote for or against the reorganization plan," he explained in a letter to investors.

Oja acknowledged that the company's strategy of rapid growth had not been sufficiently justified, as the company had not reached profitability.

"Due to accumulated losses, the debt burden has grown too large, making Planet42 financially vulnerable to unexpected changes in the business environment and customer behavior, leading to a liquidity crisis," he added. He further explained that the liquidity crisis was mainly triggered by the premature termination of rental agreements by customers, which was primarily caused by a weak economic environment coupled with political uncertainty and the rapid deterioration of old refurbished cars.

Additionally, Oja noted that the realization of currency risk contributed to the liquidity crisis. "Our cash reserves came under additional pressure at the end of June 2024, when the South African rand (ZAR) exchange rate significantly strengthened (by more than 7 percent), forcing us to pay an additional margin call of €2 million."

Oja emphasized that the Planet42 group had not exhausted its financial resources, but forecasts indicated a risk of depletion in the coming months if recent trends continued, which necessitated the decision to temporarily suspend payments on subordinated loans.

"The current liquidity crisis cannot be overcome without reorganization. The goal is to achieve profitability after restructuring in both the Estonian and South African subsidiaries and to reach agreements with all lenders to overcome the difficulties and ensure sustainable operations," Oja added.

Investors not surprised

The news did not come as a surprise to those who had invested in the company.

"In fact, the red flags were already raised earlier. Investors had been discussing for at least a year that the situation wasn't looking good, and many had reduced their loan positions based on this information," said investor Taavi Ilves.

Ilves admitted that because the company's founder was a friend, he felt more confident in investing.

"In hindsight, if I consider all the interest I received and don't overvalue the company's worth, the loss would be around €17,000, but on paper, the portfolio drops by over €100,000," he said.

Ilves noted that several investors have also sought legal advice. "As someone not well-versed in legal matters, it seems that we'll have to wait for the reorganization plan, after which all investors can vote on it. There's likely not much that can be done before the plan is presented," he said.

Planet42 was also popular among those promoting investment. Unfortunately, many people make decisions by following prominent figures, but influencers are not bound by the same rules as financial advisors.

"I have to research an investor's background and analyze their portfolio to arrive at any kind of recommendation. Naturally, when we talk about finfluencers, this doesn't happen, so their advice should be taken as an idea, but certainly not as a recommendation," commented Valeria Kiisk, a board member of Redgate Capital.

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