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March 24, 2023

Hidroelectrica re-enters insolvency

Fondul Proprietatea: The company returns to a state of reorganisation and the former judiciary
administrator was reinstated immediately. A listing on the stock exchange this summer is out of question.

Hidroelectrica re-enters insolvency, following a decision made Tuesday evening by the Court of Appeals, which admitted the complaints filed by several creditors, including the so-called ‘smart guys.’ The information was confirmed by Remus Borza, former judiciary administrator of Hidroelectrica. The sentence is definitive. There were three types of appeals: against the decision of entering insolvency, against the preliminary table of creditors and against the conclusion of the insolvency. Today, the Court of Appeals admitted the appeal against the end of insolvency. This is why Hidroelectrica must re-enter insolvency.
The former judiciary administrator, Euro Insol was reinstated with immediate effect, Franklin Templeton, the administrator of Fondul Proprietatea, shareholder of Hidroelectrica announced yesterday.
The Court of Appeals also dismissed and returned to the syndic judge for a new trial two more files, the first being a lawsuit initiated by Hidroelectrica against a decision of the syndic judge that admits a claim of Termolectrica, and the second initiated by Elsid Titu against a decision of the syndic judge which does not admit a claim of approximately RON 13 M, following the enforcement of the major force clause in 2011.
According to HotNews.ro, the appeals against the preliminary table were sent for a retrial. With the appeals against the preliminary table, creditors want to be recognised a sum of about RON 1.3 bln. If it reached the situation in which it must pay this sum, Hidroelectrica will have to renounce some assets. As for the end of insolvency, the Court of Appeals admitted the complaints because some procedures stipulated by the Law of insolvency were not observed. Remus Borza confirmed that the appeals against the preliminary table were sent for a new trial. As for the appeals against the start of the insolvency, Borza said that he cannot give information until he sees the court decisions for each case individually. If Hidroelectrica also lost the appeals against the start of insolvency, the situation would become even more complicate. “This means that Hidroelectrica was never insolvent, that the contracts with the smart guys were not terminated, that we did not lay off 1,300 people and we would return to the precise initial situation,” Borza explained.
Because it re-entered insolvency, Hidroelectrica will no longer be listed on the stock exchange this summer.
Gabriel Dumitrascu, head of the privatisation division of the Department for Energy, said at ZF Power Summit, without elaborating, that the Ministry of Economy could use an extraordinary way of appeal in order to end the insolvency of Hidroelectrica, Mediafax reports.
Worth mentioning, Hidroelectrica won in a first phase at the Bucharest Tribunal, but the Court of Appeals gave the definitive sentence which is against the company. Information about Hidroelectrica possibly losing in court appeared since before the last term in court, which was February 20.
Euro Insol shows in a report on the causes of the insolvency of the state company, that the bilateral energy sales agreements generated losses of EUR 1.2 bln during 2006-2012, because of the small prices at which beneficiaries purchased the electricity. According to Euro Insol, Alpiq Romenergie and Alpiq Romindustries, companies belonging to Swiss group Alpiq, caused a loss of RON 850 M to  Hidroelectrica, while the contract with Energy Holding caused losses of about RON  1.4 bln during 2006-2012. The contracts with Alpiq Romindustries and Energy Holding were denounced by Euro Insol in 2012.

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