The $3.95 million loan of LCC DPM, a Belarusian subsidiary of CDRL, has been placed on immediate default, the company said. The company’s CEO has filed a petition for the prevention of insolvency and bankruptcy.
The Board of Directors of CDRL announces that on October 23, 2023, it became aware that Alfa – Bank, headquartered in Minsk, has placed the loan provided under the multi-currency revolving credit line of the issuer’s subsidiary LCC DPM, headquartered in Belarus, immediately (i.e. 10 calendar days from the date of receipt of the letter) due as of October 20, 2023. The amount of the loan due as of October 20, 2023 is $3,950,000, according to the company announcement.
The reason for placing the subsidiary’s obligation in immediate maturity is the occurrence of signs of insolvency, as well as a decrease in the value of the collateral as a result of an insufficient amount of goods in the subsidiary’s turnover, which are the collateral for the loan in the form of a pledge on these goods. The subsidiary does not have liquid funds to repay the loan within the stipulated timeframe, it announced.
CDRL also said that the CEO of the Belarusian company has applied to the Minsk Regional Executive Committee to prevent insolvency and bankruptcy in accordance with Belarusian regulations in effect as of October 1, 2023.
These regulations oblige managers of Belarusian companies, under the penalty of subsidiary liability, upon meeting the prerequisites for insolvency specified therein, to submit the above-mentioned application in the course of the procedure preceding the possible declaration of bankruptcy of the company. The request includes a description of the measures necessary to be applied by the competent authorities in order for the subsidiary to be able to pay its matured debts to creditors and to be able to continue its operations, including in the area of amending agreements with shopping centers, establishing the terms of the credit line, increasing the margin on goods and suspending enforcement of obligations under lease agreements, it was stated.
CDRL stresses that the fact that the bank has demanded immediate repayment of the loan, as well as the filing of an application for insolvency and bankruptcy prevention on behalf of the subsidiary, may result in CDRL’s inability to obtain payment from the subsidiary of amounts due from it for the sale of goods in any part.
It also recalls the write-down of the entire value of the subsidiary’s shares and its fixed assets, including goodwill, for a total amount of PLN 54.7 million. In addition, CDRL has receivables from the subsidiary in the total amount of PLN 9.2 million, which have been subject to an impairment charge of PLN 4.3 million. As of September 30, 2023, the company forecasts an increase in the allowance for receivables in accordance with the adopted accounting policy by an amount of PLN 1.7 million, resulting in an unwritten receivables value of PLN 3.2 million.
The company’s Board of Directors considered the above information as confidential, bearing in mind the possible consequences of placing the subsidiary’s credit on immediate maturity and initiating the procedure related to the prevention of insolvency and bankruptcy in accordance with the applicable Belarusian regulations, i.e. the necessity to increase the write-downs of receivables, as well as the possible loss of control over the subsidiary in the event that the subsidiary’s CEO files a bankruptcy petition, which will take place if the planned restructuring measures do not bring the expected results, it was announced.
CDRL is a distributor of children’s clothing sold under the Coccodrillo private label, which is known on four continents, including countries such as China, Brazil and Saudi Arabia, among others. The company debuted on the WSE’s main market in 2014. CDRL Group owns its own brands Coccodrillo, Lemon Explore, Petit Bijou, Broel and the largest children’s supermarket chain in Belarus – Buslik.
Source: ISBnews
