“Had I known in 2009 that we would have a recession that would continue into 2016, I would have taken some additional measures to those that I did. But would you have expected in 2009 to experience today what we are experiencing?” asks Ioannis Stroutsis, the owner of electrical goods chain Elektroniki Athinon, which went bankrupt last Wednesday.
He reveals to Kathimerini that from the end of 2015 until February 2016 there were talks with distressed debt funds, mostly from the US, in an effort to save the company; however, that led nowhere as even they appear to consider investing in Greece rather dangerous.
Despite employee opposition, Stroutsis defends his decision to declare bankruptcy, claiming it was the only way for the staff to get compensation. Otherwise, the liquidation of the merchandise, used as collateral for bank borrowing, would mean only the banks could issue compensation.
There are three main reasons for the collapse of the only Greek-owned chain selling household appliances among the country’s three major market players. The first concerns the drop in demand. The first few years of the crisis inflicted a major blow on the sector, as it is a particularly flexible form of expenditure. With the exception of cell phones, consumers only buy new appliances to replace old ones that have broken. Data from GfK Temax showed that while the sector’s turnover came to 3.59 billion euros in 2008, by 2015 it had declined 45 percent to just 1.98 billion. Its lowest point was in 2013 (1.72 billion).
Elektroniki Athinon suffered the biggest decline as its turnover fell from 227.06 million in January-December 2008 to 67.84 million euros in the period from July 2014 to June 2015, a drop of 70 percent.
The second reason, which came as the most devastating blow, was the capital controls introduced by the government at the end of June 2015. In April 2015, Elektroniki had reached a deal with banks for a 50 percent loan haircut and the transformation of the rest of its debt from short-term to long-term, along with a boost in liquidity, a share capital increase and a commitment by suppliers for better terms in their dealings with the company. By the end of May, the chain had received a 4-million-euro boost and the completion of the legal process for the haircut was scheduled for August. The 23-day bank holiday and the capital controls changed all that.
Finally, the lack of trust in the Greek economy resulted in foreign suppliers reducing their credit dramatically during the crisis years. Greek suppliers followed that practice in 2015, with the company’s Greek ownership being its main disadvantage, as its bargaining position vi-a-vis suppliers was seriously compromised.