For the first time since the collapse of the Czech-Slovak investment company Arca Investments, comprehensive information on the value of its assets has appeared. The expert opinion published in the insolvency register estimated the value of its assets at 2.6 billion crowns. Arca owes 23 billion.
The expert’s estimate of the value of Arcy Investments’ assets is therefore only eleven percent of the value of the receivables. However, the company promises that thanks to the planned reorganization, it will bring back half of the receivables from creditors. According to the latest available information, the magic of the entire asset-enhancing operation is that Arcy’s key projects will continue to run and not be sold immediately, as would be the case in bankruptcy. Subsequent sales are then intended to create the desired greater value for creditors.
“The expert opinion does not take into account the positives that should be given by the reorganization, primarily obtained here by the proposed asset transformation. It is also necessary to emphasize that the report does not appreciate Slovak assets, these are the assets that will belong to the Slovak property after the commencement of secondary insolvency proceedings in Slovakia, “said insolvency administrator Arcy Lee Louda.
The expert opinion was prepared by Equity Solutions Appraisals on the basis of a resolution of the Municipal Court in Prague last October. The value was determined by experts on the basis of the situation from 30 September 2021.
“Until 2018, there were growth trends and subsequently the value of the balance sheet total decreased mainly due to a significant decrease in the value of long-term financial assets in 2020. In the same year, the value of equity fell to negative values,” wrote experts from Equity Solutions. Appraisals.
Pledged shares
According to the report, J&T Banka has a large part of Arcy’s assets as the only secured creditor, based on loans from the first half of 2020. At that time, Arca was already in bankruptcy, according to the insolvency administrator. J&T Banka has loans secured by investment shares of the Nova Real Estate fund, which is managed by Redside. Arca was a significant shareholder in the fund. According to an expert opinion, the value of the fund’s secured shares is CZK 919 million.
The stake in the Nova Real Estate fund is one of the most interesting parts of Arcy’s assets. The fund includes office buildings, shopping parks and logistics centers. The net asset value of the fund was three billion crowns at the end of February.
Most of Arcy’s debts come from short-term bills, which people bought with a view to high value. While at the end of 2018 Arca Investments had short-term liabilities of 450 million euros, at the end of September 2021 it was more than 620 million euros.
At the same time, the economic results developed in the opposite direction compared to the debt. “The result of the current period reached positive values in the first year of the observed period (2018 – ed. Note), then it reached only negative values,” the experts said in the report.
The expert opinion is one of the key documents awaited in the Arca case. According to insolvency administrator Lee Louda, a forensic audit should also be completed. Based on this, the administrator begins to file the first lawsuits for transactions that are suspected of being used, for example, to cut other creditors. However, the details of the forensic investigation were not published.
Waiting for the plan
Last but not least, another expected key document is Arcy’s reorganization plan. It should clearly identify how much creditors can get back and under what conditions. Arca has been working on the plan for a year. At the same time, the court has already granted the company an extension of the deadline for submitting the document. The deadline is June 20.
Arca Capital Group is a complex intertwining of two hundred companies. Arca Investments was the parent company of the holding. The core of the business was in the Czech Republic and Slovakia. It also did business in Austria, and also used companies in Malta and Cyprus for financial transactions.
