The insolvency of major retailers, such as SPAR, Ultra Pro Computers and Trident, badly hit by the crisis and by the aggressive expansion of international store chains, is freezing millions of euros in loans granted by major banks such as UniCredit, Romexterra and ING.
Bank bailiffs that are fighting to collect more than 10 million euros from the store chains that have gone insolvent this year have their hands tied now, because once the insolvency procedure has been started, all debts of such companies to suppliers and banks are frozen. Banks have an advantage compared with the suppliers of these networks: they requested collateral from retailers when they agreed to lend them the money.
"Court and bank bailiffs can no longer do anything as soon as the debtor company goes insolvent, because any action to sue or to subject to compulsory execution is suspended," says Dorina Gont, spokesperson of the Chamber of Court Bailiffs by the Bucharest Court of Appeals.
Banks are the biggest lenders of store chains, because local retailers have financed most of their expansion projects with loans over the last few years in order to keep up with the development of the international networks. In turn, suppliers say that the taxes they paid to the operators to get their products on shelves have helped store networks expand, too.
Usually banks take stores or shopping centres they finance as collateral. Yet, given the current situation on the market, such assets can be converted into cash in a very long time, because of the lack of buyers.
The last major retailer to go insolvent, Trident, bet on real estate in the past two years, investing approximately 15 million euros in the opening of the Trident Shopping Center in Sibiu. At the end of 2008 it announced the signing of a 10 million-euro loan agreement with Romexterra Bank to finance part of this project.
The bank did not provide any details about the loan, but the collateral pledged by the retailer to get the funding was most likely the Trident centre itself. It opened in April and had a hypermarket operated by Trident as its anchor, but closed last week because there were not enough clients, according to tenants Jolidon and Secuiana.
The first major supermarket network that went insolvent was SPAR, which filed for insolvency at the request of its shareholders, siblings Ioan and Floare Cuc from Arad. It accumulated debts to several banks, mainly to Unicredit and ING (which have similar receivables to collect), according to information supplied by the provisional receiver, who would not provide additional details on this case. Representatives for Unicredit and ING did not supply any information for this story.
Unicredit sued another retailer that turned out to be a risky bet, the Ultra Pro Computers chain, before it went insolvent.
BRD, too, has 6.6 million RON (almost 1.6 million euros) to collect from former charcuterie producer Stenyon, now insolvent, which accounts for more than half of the 12 million RON (some 3 million euros) debt that the company accumulated over the last few years, according to liquidator Management Consult based in Giurgiu county.
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