The Municipal Court in Prague on Monday sent the WCA International fund into bankruptcy, in which more than 5,000 people invested more than CZK 2 billion, according to Petr Veselý, a lawyer for the fund’s creditors. This is according to information in the insolvency register and a statement by Veselý. WCA International said in the register in January this year that it wanted to try to reorganise, i.e. to continue the fund’s operations. According to Veselý, the company’s only activity could be the recovery of claims that WCA has against various companies and people. However, the lawyer said that a substantial part of the money invested in WCA ended up with people connected with the management of the fund. According to the lawyer, the police are also investigating the activities of WCA.
In the bankruptcy order, the court announced that WCA’s creditors, who have not yet filed their claims, now have two months to file. The bankruptcy declaration can be appealed within 15 days. Subsequently, a review of the claims will be held on 24 May at the Municipal Court in Prague, followed by a meeting of creditors at the same venue. “The decision on bankruptcy is clearly good news, as the debtor is in a state of over-indebtedness as well as insolvency,” said Veselý of the Žižlavský law firm, who is also chairman of the court-appointed creditors’ committee.
Bankruptcy is a liquidation method of bankruptcy resolution, where the debtor’s assets are sold off. In a statement in January, WCA listed one Audi A8 passenger car without a technical inspection as its only tangible asset. It also published a list of loans it had made to various companies and people, from furniture manufacturers to a writer, amounting to tens or hundreds of millions of crowns. She also stated that she wanted to attempt a reorganisation, which would mean that the company’s debts would be covered by the proceeds of its other activities.
“As it stands now, the only significant assets of the debtor are hard-to-collect receivables. The debtor has not yet explained to the creditors’ committee what would be the added value of pursuing these debts itself,” Veselý said. “In addition, a substantial part of the clients’ money seems to have ended up in the account of the former managing director of WCA International, Matúš Polák, and other related persons. Therefore, I have doubts whether the debtor would have pursued these claims in a reorganisation as vigorously as the insolvency trustee did in bankruptcy,” he added. WCA said in the insolvency register that it also had a claim against Polák. However, it was the only one that did not specify how large the claim was.
The WCA fund is also being investigated by the police’s National Centre against Organised Crime for suspected fraud, according to Žižlavský. “The typical investors (of WCA) were not financial sharks, but often people of retirement age who had lost their life savings. Rather, the Modrava municipality, which is claiming more than CZK 200 million in the proceedings, is an exception,” the office added.
The Association for Investment Market Transparency has previously commented on the WCA insolvency that it is a so-called alternative fund. These funds are registered with the Czech National Bank, which does not supervise their activities. Alternative funds are not allowed to offer their services and products publicly and should target qualified investors. “Given the structure and number of clients, we believe that WCA has long been in breach of the law and may have committed the crime of unauthorised business,” the association said.
WCA International is not the only fund that left thousands of disgruntled clients with investments in the hundreds of millions to billions of crowns after its collapse. For example, the firm Growing Way, which was sent into bankruptcy by the Municipal Court in Prague in December 2021, defrauded about 4,000 people of CZK 1.5 billion, according to police. Four people were also indicted last year for investment fraud involving about 2.4 billion in damages linked to J.O. Investment. According to the indictment, they defrauded at least 3,900 clients. According to detectives, the two firms operated on the basis of a so-called Ponzi scheme, known as an airplane or pyramid scheme, in which people entrust money to an investment fund with the expectation of high appreciation, but the fund operator keeps the money for its own use.
Source: CZK
