CKD DS Transportation Systems

Advisory mandates managed by EEIP in 2001 included the sale of assets for the insolvency administrator of CKD DS Transportation Systems (formerly CKD Tatra), the producer of one third of rolling stock manufactured in the world; in particular trams, locomotives and metro vehicles. The company was successfully restructured by a unique method of a “revitalization bankruptcy”.

In 2002, the particular assets of CKD DS were sold to Siemens KV (formerly Spolecnost kolejovych vozidel), 100% subsidiary of German giant Siemens AG. In line with its earlier statements and agreements, Siemens KV employed around 800 staff in its new production capacities.

Transaction generated the sum of CZK 750 mil for the insolvency administrator. In April 2005, the court approved the decision of the insolvency administrator to begin the pay-off of satisfaction receivables for deferred creditors. The amount dedicated for distribution is CZK 1.257 billion, which is 17% of the nominal amount of receivables ascertained for the purpose of bankruptcy proceedings.

In the Czech setting, the transaction was a rare case of a successful rescue through bankruptcy proceeding combined with an asset sale.

The successful restructuring of CKD DS Transportation Systems that applied, in the Czech Republic by then unknown method of a “revitalization bankruptcy” significantly influenced Czech legislators during preparations of the new Insolvency Act. The publication activity of Prof. Mejstřík on the subject of insolvency supported by the rare example of successful restructuring of CKD and subsequent sale to the strategic partner, served as a source of inspiration for new and more efficient insolvency legislation. A possibility of reorganization and revitalization of troubled firms instead of traditional fragmented sale of firm’s assets was implemented in the new Insolvency Act. As a result, the new legislation enables potential sale of the entire insolvent company and significantly increases the value of the firm for creditors.