Ivica Todorić isn’t happy with Ante Ramljak being the one to decide over the creditor’s council…
The former Agrokor boss takes to his blog once again on the 23rd of November, 2017, this time to share his thoughts on the creditor’s council, the temporary creditor’s council, and how Agrokor’s government appointed extraordinary commissioner, Ante Ramljak, has ultimate power over the entire procedure.
As usual, we bring you Ivica Todorić’s latest blog post translated in full into English below:
”The creditor’s council is one of the bodies of the extraordinary administration procedure, together with the court, the extraordinary commissioner/manager and the advisory body.
What is characterises the creditor’s council is an extreme lack of transparency in its choice, vague powers and inadequate representation of all of the creditors. In addition, the creditors, especially the small creditors, aren’t adequately protected via this body and cannot adequately represent their interests. In other words, what we’re working with here is a body into which only the selected few can enter.
The creditor’s council has a maximum of nine members and is composed of creditor representatives. The number of members of the creditor’s council and the classification of creditors in the group is determined by the court at the proposal of the extraordinary commissioner, where the number of members must be odd (Article 18, paragraph 1 of the Act).
Thus, the number of members and the classification of the creditors in the group is determined by the court (not elected) at the proposal of the extraordinary trustee/commissioner. In other words, the number of members of the creditor’s council, and what groups they’ll be be categorised into, will be dealt with solely by the [Agrokor’s] extraordinary commissioner – Ante Ramljak.
In addition, the law stipulates that, for the purposes of assembling a creditor council, the creditors will be classified into special groups in view of the different legal status of each group (Article 18, paragraph 2), however, the basis on which criteria the creditors are sorted into special groups isn’t clearly stipulated. The above is once again left to the discretion of the extraordinary commissioner.
As far as the creditor’s powers are concerned, they have the right to be informed about the status of the debtor and their affiliated and subsidiary companies, and they can take part in the name of the creditor in the drafting and preparation of the settlement, and give consent to the extraordinary commissioner on the final text of the settlement (Article 19 of the Act).
If the creditor council compares with the bodies known in classical insolvency law, we can come to the conclusion that they should have the opportunity to review everything that is done by the extraordinary commissioner, review the complete documentation, see what’s being done with cash and other forms of money, review business books, and so on. Thus, the creditor’s council should have complete control over the management procedure undertaken by the extraordinary commissioner. Moreover, it should ultimately have the mechanism [power] to remove the extraordinary commissioner from his or her job if he or she isn’t doing well – that is, to propose his/her dismissal to the court and see if the court respects that decision.
Likewise, in classical insolvency law, all creditors make up the assembly of creditors and it’s the most powerful organ. It usually takes place at a hearing where all the creditors have the right to say what they think. This creditor’s council has just nine members (essentially five, because there is still a temporary creditor’s council) and that’s been opted for by non-transparency.
None of the above is the case with Lex Agrokor. Only the selected ones can enter the creditor’s council. And the actual creditor’s council is also used for the implementation of non-legal and criminal actions directed by Knighthead (American fund) and its partners.
In addition, the Law also envisages the so-called temporary creditor council (Article 31 of the Law), also appointed by the court, at the proposal of an extraordinary commissioner. The temporary creditor’s council has the same rights, powers and obligations as the creditor’s council, and assumes and performs the function of the creditor’s council until its [eventual] establishment.
As far as I know, no creditor’s council has been formed yet, but there’s a temporary one. It has only five members: Marica Vidaković (Kraš) as a representative of a group of creditors for “big suppliers”, Mato Brlošić as a representative of a group of creditors for “small suppliers” and representatives of Knighthead Capital Management as representatives of a group of creditors [under the name of] “bondholders” Sberbank of Russia as the representative of the group of creditors [under the name of] “unsecured creditors” and representatives of Zagrebačka Banka as a representative of a group of creditors [categorised as] “secured creditors”.
Since the (temporary) creditor’s council makes decisions going off the majority of votes present, it’s clear that it isn’t difficult for Ante Ramljak to control all the processes in Agrokor, since the majority of these five members are his people.
Moreover, the people who participated in the creation and writing of the Law are sitting in the creditor’s council, and they were legal advisers to Ante Ramljak. Thus, the first representative of Knighthead Fund in the temporary creditor’s council was Tin Dolički (lawyer) who was also Ante Ramljak’s legal adviser. It’s undisputed that in this case there would be a conflict of interest.
Therefore, it can be concluded that:
– The election of members of the creditor’s council is ultimately non-transparent
– The number of members and groups of creditors is decided exclusively by the extraordinary commissioner
– The powers of the creditor’s council are vague
– The first representative of Knighthead Fund in the creditor’s council was Tin Dolički, legal adviser to Ante Ramljak, representing a conflict of interest
– The representative of the group of “big suppliers” (Kraš) whose adviser was Ante Ramljak, represents a conflict of interest
– Ante Ramljak is using the creditor’s council to implement the plans of various groups headed by Knighthead and sponsored by Prime Minister (Andrej) Plenković and Ministers (Martina) Dalić, and (Davor) Božinović, which will result in the large-scale alienation of money for these same groups”
Ivica Todorić’s blog post translated in full from ivicatodoric.hr
