One of the important cases I dealt with as an insolvency administrator with special authorization (i.e., a specific license to manage large companies and financial institutions) was the case of a distillery in Trmice. The professional public knows this case as a giant default by a company that had modern technology yet did not even manage to bring the distillery into proper operation. The non-professional public knows this case due to the terrible smell coming from the distillery during its pilot operation. The funny thing was that the judge in charge of the case lived nearby and noted that it really did smell bad.
It was a really large case that gave big banks, the legal department of a large energy company, and an adviser from the big four a real workout. The courtroom was full of people during the review meeting. I was also repeatedly asked about the case by journalists and by the Trmice authorities.
It seemed it would be impossible to sell the distillery for a long time. The bids we received, if they could be taken seriously at all, were well below the expert valuation – almost CZK 1 billion – even though no one probably believed it would be possible to actually sell the distillery at that price. Another funny moment was when an interested party from Russia offered me a bribe by e-mail, in addition to the price for the distillery. I must say that I stared at the e-mail in disbelief for quite a long time and, like a complete amateur, could not even bring myself to reply to it.
We finally came to an agreement with the creditors’ committee to announce a tender and, without too much grumbling, to sell the distillery to the winning bid, whatever it would be. In the end it was really low – less than CZK 100 million. Another curiosity in the case was that the interested party that submitted the bid had its registered office at Durychova 101, Prague, which is the building in front of which František Mrázek was shot in 2006. However, the conditions of the tender included, as standard, a provision allowing us to cancel the tender at any time or even to reject all the bids. This proved especially useful in this case. On the day the result of the tender was to be announced, I had a phone call from a representative of an interested party that had found out about it at the last minute. It was a person from London but at least part of his capital came from a former Soviet Union country. This new interested party put the cat among the pigeons for me when he said he was willing to pay USD 10 million for the distillery, i.e. approximately CZK 270 million. I had a bird in the hand and two in the bush, so I started improvising and came up with the following idea. I thanked him for his bid but said I had just finished the tender, the winner had met all the requirements and that I was unable to verify his bid. So I needed reassurance for myself, for the creditors’ committee, for the secured creditor and for the court that his interest was serious and that he was actually able to pay the price. Hence I needed him to send USD 1 million to the asset account. Although the interested party requested a simple supporting document – in fact an advance invoice – he actually sent USD 1 million to the asset account on the same day. I had the phone call with the interested party on 15 February, the contract for the sale of the company was signed and USD 9 million was paid less than a month later, and the creditors thus received almost CZK 200 million (200%) more.
