CZ/SK verze

PKP CARGO: Crisis Deepens as Controlled Restructuring Under Court Supervision Begins

PKP CARGO: Crisis Deepens as Controlled Restructuring Under Court Supervision Begins
photo: PKP CARGO / Public domain/PKP CARGO
08 / 07 / 2024

The crisis at Poland's national freight carrier, PKP CARGO, is deepening once again. RAILTARGET brings exclusive information about the controlled restructuring under court supervision.

At the end of June 2024, the management board of the Polish rail freight carrier PKP CARGO submitted a request to the court to enter the company into a so-called recovery proceeding. Acting CEO Marcin Wojewódka emphasized that the application aims to save the company and ensure its continued operation. According to Polish law, this is not a declaration of bankruptcy. PKP CARGO cannot legally become insolvent.

Recovery proceedings involve a special regime where the court appoints an administrator or judicial supervisor, and the company’s management bodies do not act, meaning all rights are suspended. Employees can be laid off with a shortened notice period, and assets can be liquidated, similar to bankruptcy or actual liquidation. However, unlike bankruptcy, the goal is to save the company, restore its liquidity and competitiveness in the long term, and preserve as many jobs as possible.

According to PKP CARGO’s management, recovery is currently the only effective path that offers a chance of success. One reason for entering this regime is the ongoing lack of agreement with trade unions. The recovery regime means that PKP CARGO will not have to pay interest on unpaid debts, creditors will not be able to file for asset seizures against PKP CARGO, and the company will retain the ability to participate in tenders, provided it timely pays at least its social security and tax obligations.

The recovery regime also allows for suspending certain collective agreement provisions, particularly regarding employee layoffs. The financial situation is worse than expected in the spring. The company’s management had already created some space for savings earlier. For example, since June 1, up to 30% of employees can be placed on a work stoppage regime on the employer’s side. Some of the employees on stoppage will find new work at PKP Intercity, which, at the initiative of PKP CARGO, will employ up to 300 workers in its workshop division Remtrack.

PKP CARGO stated that about 20% of its employees are currently at home. Monika Starecka, a board member responsible for finance, announced this week that PKP CARGO posted a loss of nearly PLN 118 million for the first quarter. However, the company still has sufficient cash flow, which will be a key factor for the court in assessing PKP CARGO’s application.

The recovery regime is disadvantageous for creditors. They collectively hold claims against PKP CARGO amounting to PLN 4.6 billion. Among them are many small and medium-sized enterprises. PKP CARGO has assets worth more than 4 billion PLN and equity worth more than PLN 2.3 billion.