ECONOMY

Courts are holding up applications for bankruptcy

Despair is the only word to describe the mood in Greek commerce, as economic developments have put paid to any hopes of a recovery in the foreseeable future for such businesses, growing numbers of which are joining the long list of enterprises filing for protection.

As more and more companies opt to file for bankruptcy rather than sink themselves deeper into debt and hope for survival, professionals say that frequent and lengthy strikes by judicial employees have backed up the legal system and thrown more obstacles in the paths of businesses looking to turn over a new leaf.

One example is footwear manufacturer Elite, which filed for protection from creditors under Article 99 of the bankruptcy law in December of 2009 and received its approval just last month. The application had been rejected initially, though it was finally approved after the company came to an agreement with about 80 percent of its creditors and went ahead with a restructuring plan for the closure of a number of its retail outlets.

Toy store chain Kou-Kou waited 11 months for a court to reach a decision on its application to file for protection, which was eventually granted in mid-October. The company has settled with the majority of its creditors (80.5 percent), it has closed down some 10 retail outlets and cut costs by 50 percent. Kou-Kou?s management has expressed its intention to keep the company afloat, though the present conditions do not bode well as it expects sales during the upcoming Christmas season to be insufficient to cover the shortfall of the last few months.

Ridenco SA, a subsidiary of Ridenco Commercial, a company specializing in the import, wholesale and retail trade of clothing, footwear, sportswear and cosmetics, has received one postponement after another in its application for protection under Article 99, with the most recent court date set for November 23. Ridenco SA has the exclusive representation of the international brands Timberland, Nautica, La Martina, FiveFingers and Le Duke in Greece.

Meanwhile, the company?s subsidiary in Cyprus, Woodland Designs Plc, received a new deadline from a Nicosia court for November 30 in order to file an appeal against the dissolution of the company. The remaining stores of the once-healthy group are selling off their stock and preparing to close down, as they have lost their supply of brands through Ridenco.

Fanny SA, a clothing and footwear retailer in northern Greece, has also been waiting for a decision on its filing for protection from its creditors since last March. The case made the media recently when the owner of the company was arrested over having failed to pay some 600,000 euros in value-added tax.

Representatives of the business community say that companies which have filed under Article 99 but have large outstanding debts to the state should reasonably be subject to the same treatment.

Other companies that have filed for protection are men?s clothing retailer Glou and Lakis Gavalas SA, an importer of major international brands, while experts warn that a flood of closures are on the way within the next few months.