Czech bank calls it a day over $50m debt(400 words)

Published: 10/26/2000

Czech state owned bank Konsolidacni Banka has finally pulled the plug on LET Kunovice with the announcement that intend to proceed with bankruptcy proceedings over debts amounting to $50m.

The company's owner Georgia based agricultural aircraft producer, Ayres Corporation have been fighting the efforts to bankrupt the producer for a number of months, but the company's financial health has deteriorate substantially though 2000, with its 1400 workers going unpaid over the last four months.

The general problems of the producer have become progressively worse over the last six weeks with Burlington, Washington commuter carrier Pan Pacific suing the company for bankruptcy along side Konsoliddacni, for non delivery of an ordered 5 L-410 in a dispute with Ayres that has been dragging since the beginning of the year.

The various creditors of the bank will now file within 30days and the court will appoint an administrator to work with creditors. The company 93% owned by the Ayres has sought a number of ways to escape from its mounting losses and the slow progress of the Loadmaster programme originally intended to double the work force at the Kunovice plant to fulfil $2 billion of orders. The lead customer Fedex was however, reported to be slow in confirming its orders, leaving the Czech plant that was intended to produce the aircraft for the European market increasingly worried that it would not be around long enough to see the orders come through. A problem further compounded by litigation with Pan Pacific Airlines after a visit to the plant by airline executives in January 2000 reportedly found their aircraft in the very early stages of assembly and led them to sue for their production deposit.

Various plans have been pursued to save the plant including interest form BAe Systems as part of the offset for the Czech Air Force ordering the Grippen. There were reports that the Czech bank had put considerable pressure on Ayres to sell the producer and it remains uncertain whether than avenue has been completely closed.

Article ID: 2157