Please do not fail to read the importers post (GrahamSprite) further down the thread - John D.
This is being reported. Is it true?
Rod1
Czech Aircraft Works (Sports Cruiser) declared bankrupt?
Moderators: John Dean, Moderator
Czech Aircraft Works (Sports Cruiser) declared bankrupt?
Last edited by Rod1 on Fri Jun 06, 2008 9:27 am, edited 1 time in total.
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Captain Pulsar
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Joe Iszard
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sportcruiser
Attached is the 'Ruling'
Seems the firm will continue in the hands of Trustees.
In my view the product was too cheep, I have one, It's a fine piece of kit, however my previous aircraft were high wing which I prefer!
Regional Court in Brno
Husova 15
601 95 Brno
File no. KSBR 44 INS 1207/2008
In Prague on 26 May 2008
Petitioner: COMINVEST ASSOCIATED LIMITED, registered office Pasea Estate, Road Town, Tortola, British Virgin Islands, reg. no.: 626279
Debtor: CZECH AIRCRAFT WORKS spol. s r.o., registered office Kunovice, Na Záhonech 212, Postal Code: 686 04, Identification No.: 251 10 969, registered in the Commercial Register administered by the Regional Court in Brno, Section C, Insert 33816
PETITIONER'S RESPONSE TO THE DEBTOR'S NOTICE OF 22 MAY 2008
MOTION TO APPOINT A PRELIMINARY TRUSTÉE
I.
On 22 May 2008, the Regional court in Brno published in the insolvency register the Debtor's notice of 21 May 2008, whereby the Debtor presented to the court:
(i) a list of work in progress on the Mermaid products;
(ii) a list of inventory in stock;
(iii) a list of finished products;
(iv) a list of work in progress;
(v) a list of payables to the state and employees;
(vi) a list of loans and borrowings;
(vii) a list of accounts receivable;
(viii) a list of received advances;
(ix) a list of accounts payable;
(x) a list of advances paid to suppliers;
(xi) the income statement and the balance sheet as of 31 December 2007 and also the income statement and the balance sheet as of 30 April 2005, to which the Debtor fully refers.
The Petitioner hereby presents to the insolvency court this response to the Debtor's submission dated 21 May 2008 and states the following facts in relation to each of the above exhibits (lists).
II.
Valuation of work in progress on the MERMAID products as of 30 April 2008
In the exhibit “Balance of work in progress on the MERMAID products“, the Debtor alleges that the total value of these semi-finished products amounts as of 30 April 2008 to 616,000 CZK, without describing the method used by it for the valuation of these semi-finished products. We understand that the Mermaid type is currently in the prototype phase and is not thus a series product, which, if manufactured within continuous series production, could be appraised by a standard accounting method. We believe that the valuation submitted by the Debtor would be challenged by an auditor. The Debtor supports its valuation merely by its solemn declaration.
III.
Balance of inventory in stock as of 30 April 2008
In this respect, the Debtor also presents a summary whose truthfulness and completeness is supported only by a solemn declaration of the Debtor.
In the exhibit “Balance of inventory in stock”, the Debtor appraises the inventory in stock on the basis of the last acquisition cost. Since the Debtor purchases most of its inventory in stock in US dollars, it can be reasonably expected that the appreciation of the Czech crown has had an adverse effect on the revaluation of the inventory in stock and its value is now significantly lower than the value stated by the Debtor. The current exchange rate of the Czech crown is 15.94 CZK/USD. The Debtor purchases inventory in several monthly intervals. For illustration, we refer to the historical exchange rate as of 1 January 2008, which was 18.07 CZK/USD.
IV.
Balance of finished products as of 30 April 2008
In this case, the Debtor also presents a summary and documents its truthfulness and completeness merely by its solemn declaration.
V.
Balance of work in progress as of 30 April 2008
On the exhibit “Balance of work in progress”, the Debtor states that the value of this work amounts to 12,677,873.23 CZK, without describing the method of this valuation (the truthfulness of this statement is documented only by the Debtor's solemn declaration and the Debtor does not present any relevant evidence or arguments).
PricewaterhouseCoopers Audit, s.r.o., registered office Prague 2, Kateřinská 40/466, Postal Code 120 00, Identification No.: 40765521 (hereinafter “PWC“), which had been the Debtor's auditor since 1 January 2007, refused to provide to the Debtor an audit of its operations unless the Debtor removes serious deficiencies of which PWC notified the company's management, specifically Mr. Chip W. Erwin and the Chief Financial Officer, Mr. John W. Mohr, for the first time at the beginning of 2007. Such essential comments also included the method of valuation of work in progress. We have been informed that, to date (i.e. as of 26 May 2008), these deficiencies have not been remedied and no audit of the Debtor's operations for 2007 and no preliminary audit for 2008 have been conducted.
Last but not least, the last item of the list, marked with the product code “Plováky” (Floats), has no official product name and product identificator, but was still appraised by the Debtor at 560,000 CZK. We believe that such item would not be accepted by the auditor.
VI.
List of payables to the state and employees as of 11 April 2008
The amount of the Debtor's payables to the state and employees included in the summary presented by the Debtor was calculated as of 11 April 2008 only, while the Debtor filed its notice with the court on 21 May 2008. We have no knowledge of the reason why this list is dated as of 11 April 2008, particularly with regard to the fact that the Debtor did not reduce its payables, but on the contrary, continues to be in default in making its mandatory payments (i.e. the value of the Debtor's payables to the state and employees is higher than the amount stated by the Debtor).
VII.
List of loans and borrowings as of 11 April 2008
The Debtor submits false information in relation to two loans provided by Komerční banka, a.s. and to a note payable to SLAVIA CAPITAL Group, a.s. Neither Komerční banka, a.s. nor SLAVIA CAPITAL Group, a.s. were the Debtor's creditors as of 11 April 2008 for the following reasons:
- the promissory note issued by the Debtor on the order of SLAVIA CAPITAL Group, a.s., registered office Heydukova 6, 814 99 Bratislava, Identification No.: 31 403 387, for the sum of 11,000,000 CZK, was endorsed, before the opening of the insolvency proceedings (i.e. before 27 March 2008), in favour of the Petitioner, who thus became a proper creditor of the Debtor. The Debtor was advised of this fact by a written notice of SLAVIA CAPITAL Group, a.s., and the liability arising under this promissory note is the liability on the basis of which the Petitioner initiated these insolvency proceedings (by a petition dated 26 March 2008, which was served on the insolvency court on 27 March 2008);
- information published in the insolvency register indicates that both payables of the Debtor to Komerční banka, a.s. were assigned to FAME Jihlava, a.s. It may be assumed that Komerční banka, a.s., as the assignor of these receivables, duly fulfilled its obligation under Section 526(1) of Act No. 40/1964 Coll., the Civil Code, and duly notified the Debtor of the assignment of these receivables. Even if Komerční banka, a.s. had failed to fulfil this obligation to the Debtor (which is doubted by the Petitioner), the Debtor must have learned of the assignment of both receivables of Komerční banka, a.s. to FAME Jihlava, a.s. from the information published in the insolvency register.
Finally, it has to be noted that the value of all payables listed by the Debtor has to be increased by the value of accessories, i.e. by the contractual and late interest (for instance, this is represented in the Petitioner's case by interest at the rate of 9.5% accruing on the amount of 11,000,000 CZK, plus a 6% interest rate accruing on 11,000,000 CZK, plus 1/3% of the note sum).
VIII.
Balance of accounts receivable as of 11 April 2008
The Debtor presents to the court the balance of accounts receivable as of 11 April 2008. It is stated in the title page of this document that the data included therein are based on balances of 2007, which has not yet been audited (notwithstanding the fact that, pursuant to Section 128, the Debtor's financial statements (together with their audit) should be presented, within the shortest possible time (not later than by the end of June of this year), to the general meeting for approval and should be filed with the collection of documents kept by the register court).
IX.
List of advances received as of 11 April 2008
The Petitioner has the same comments regarding this exhibit as its comments on the exhibit “Balance of accounts receivable as of 11 April 2008” (see clause VIII. above).
X.
List of accounts payable as of 11 April 2008
The Petitioner has the same comments regarding this exhibit as its comments on the exhibit “Balance of accounts receivable as of 11 April 2008” (see clause VIII. above).
XI.
List of advances paid to suppliers as of 11 April 2008
The Petitioner has the same comments regarding this exhibit as its comments on the exhibit “Balance of accounts receivable as of 11 April 2008” (see clause VIII. above).
XII.
Income statement as of 31 December 2007
The Debtor submits that the data included in the income statement are based on balances of the year 2007, which has not been audited yet (see clause VIII.).
The Debtor submits that the company's loss for the financial year 2006 amounted to 25 million CZK and its loss for the financial year 2007 amounted to 33 million CZK. The information presented by the Debtor thus indicates that the Debtor's operations have reported a long-time loss, which increases every year.
Moreover, the income statement cannot be considered as complete, because it lacks the signature of the person responsible for compilation of the financial statements and the signature of the statutory body which is the accounting entity (the same remark also applies to the balance sheet as of 31 December 2007, the income statement as of 30 April 2008 and the balance sheet as of 30 April 2008).
XIII.
Balance sheet as of 31 December 2007
The Debtor submits that the data included in the income statement are based on balances of the year 2007, which has not been audited yet (see clause VIII.). The Debtor further submits that while its equity amounted for the financial year 2006 to 28 million CZK, it amounted as of 31 December 2007 to –5 million CZK (negative equity). This document presented by the Debtor also indicates the negative result of the Debtor's operations.
XIV.
Income statement as of 30 April 2008
The Debtor submits that the data included in the income statement are based on balances of the year 2007, which has not been audited yet (see clause VIII.).
In this document, the Debtor states that the profit before taxes for the relevant financial year reached ca 9 million CZK. If we extrapolated the profit stated by the Debtor (not including the increasing tendency), the Debtor submits that, according to its expectations, its profit will reach as of 31 December 2008 about 27 million CZK. This means that, despite all negative impacts on the Debtor's management (particularly the impact of the depreciating US dollar), the Debtor would succeed in reversing the negative business result and increase it by 60 million CZK compared with 2007, which is definitely a remarkable (but not realistic) result.
XV.
Balance sheet as of 30 April 2008
The Debtor submits that the equity for the period amounted to 3 million CZK, i.e. increased by 8 million CZK compared with the previous period.
It is surprising that, despite the Debtor's allegation that it has achieved a profit in this period, such fact has not been reflected in the actual results of the company. The Debtor failed to reduce its social service payables and its payables to health insurance companies (on the contrary, these payables are increasing, due to which the Debtor's executive exposes himself to potential criminal prosecution), fails to pay wages to its employees, has failed to pay the note payable to the Petitioner and its other liabilities to other creditors.
XVI.
Comments on the Debtor's management
The economic situation of the Debtor has been unfavourable for a long time (in the course of the year, the Debtor faced liquidity problems, since it had no funds to pay wages to its employees. At the same time, it has long-term overdue liabilities). By the end of 2007 (4 December 2007), execution proceedings were initiated against the Debtor; however, the company's executive, Mr. Ch. W. Erwin, has concealed this fact not only from creditors, but according to a statement of SLAVIA CAPITAL AERO (SC AERO) LIMITED, also from the company's members.[BB1]
Since last November, the members have been unable to agree on the method of resolution of the dissatisfactory condition of the Debtor. Proposals for discharge of the company's debt were refused. PWC (authorized to conduct the Debtor's audit) warned the Debtor systematically of the dissatisfactory situation in bookkeeping, stating that if the Debtor fails to cure such situation, PWC will not provide audit to the Debtor. Despite these warnings and opinions of the auditor, the Debtor's accounts have not yet been corrected until now to comply with the law.
Since the Debtor's executive Mr. Chip W. Erwin did not allow the other executive of the company, Mr. Francis John Nosek III., active involvement in the business management of the company by preventing him from access to information about the company's management, the Debtor's executive Mr. Francis John Nosek III decided to resign from the post of the executive (see the exhibit taken from the collection of documents maintained by the Regional Court in Brno).
The Debtor continues to be incapable of elementary material reproduction. The company uses material in stock. Since the beginning of 2008, the Debtor has failed to make statutory payments on behalf of its employees. The Debtor has also failed to pay wages to its employees for April and May. The Debtor has overdue payables to Aircraft Industries, a.s. (the owner of the area where the manufacturing workshop of the Debtor is located). As early as in December 2007, Aircraft Industries, a.s. disconnected the supply of electricity and heat to the Debtor due to the Debtor's failure to pay its liabilities and bad payment morale. The same sanction threatens the Debtor now as well.
The audit of inventory in stock for the year 2006 identified a shortage in the amount of 15 million CZK). In 2007, the audit also found material discrepancies in the balance and value of inventory.
Finally, we would like to point out that, according to our information, Mr. Chip W. Erwin possesses extensive experience with bankruptcy proceedings, since he was involved by himself in Nextair, s.r.o., which had the same object of business activities and which is now bankrupt.
XVII.
Conclusion
The Debtor (or its executive Mr. Ch. W. Erwin) is currently solving the dismal situation of the company by selling work in progress (i.e. products which have been allocated a manufacturing number and for which the customers have already paid advances) to any customer who is willing to pay in cash (without delivering the products to customers who have duly paid advances for them). The above practices of the Debtor were supported by the submission of Mr. Leonardo do Sayago of AEROMARINE, Lda, which was served on the insolvency court on 23 May 2008 (a Czech translation of this submission shall be presented by the Petitioner to the insolvency court in the nearest future). The biggest customer with whom the Debtor currently cooperates on this basis is Sprite Aviation.
By such conduct, the Debtor, or its executive, exposes himself to potential criminal prosecution. At the same time, such conduct of the Debtor damages the assets and significantly reduction possible satisfaction of the Debtor's creditors.
The Debtor currently lacks sufficient security of its manufacturing facilities, due to which it is threatened by potential embezzlement and theft, resulting in decrease of the assets from which the creditors should be satisfied.
The Petitioner believes that, based on the foregoing, it is in the interest of all involved parties (creditors and members)
to appoint a preliminary insolvency trustee,
who will provide objective information about the Debtor's management and will ensure further operation of the company within the necessary period in accordance with the existing possibilities.
Such preliminary trustee should be charged, in particular, with taking steps necessary to identify and to secure the Debtor's assets. Furthermore, the preliminary trustee should be charged with a review of the Debtor's books of account (which show a number of fundamental discrepancies). At the same time, it would be appropriate for the preliminary trustee to direct the Debtor's conduct and to handle the assets in a way preventing any further damage to the creditors caused by the Debtor's conduct.
COMINVEST ASSOCIATED LIMITED
--------------------------------------------------------------------------------
Has the execution on [BB1] CZAW's account actually been initiated?
Seems the firm will continue in the hands of Trustees.
In my view the product was too cheep, I have one, It's a fine piece of kit, however my previous aircraft were high wing which I prefer!
Regional Court in Brno
Husova 15
601 95 Brno
File no. KSBR 44 INS 1207/2008
In Prague on 26 May 2008
Petitioner: COMINVEST ASSOCIATED LIMITED, registered office Pasea Estate, Road Town, Tortola, British Virgin Islands, reg. no.: 626279
Debtor: CZECH AIRCRAFT WORKS spol. s r.o., registered office Kunovice, Na Záhonech 212, Postal Code: 686 04, Identification No.: 251 10 969, registered in the Commercial Register administered by the Regional Court in Brno, Section C, Insert 33816
PETITIONER'S RESPONSE TO THE DEBTOR'S NOTICE OF 22 MAY 2008
MOTION TO APPOINT A PRELIMINARY TRUSTÉE
I.
On 22 May 2008, the Regional court in Brno published in the insolvency register the Debtor's notice of 21 May 2008, whereby the Debtor presented to the court:
(i) a list of work in progress on the Mermaid products;
(ii) a list of inventory in stock;
(iii) a list of finished products;
(iv) a list of work in progress;
(v) a list of payables to the state and employees;
(vi) a list of loans and borrowings;
(vii) a list of accounts receivable;
(viii) a list of received advances;
(ix) a list of accounts payable;
(x) a list of advances paid to suppliers;
(xi) the income statement and the balance sheet as of 31 December 2007 and also the income statement and the balance sheet as of 30 April 2005, to which the Debtor fully refers.
The Petitioner hereby presents to the insolvency court this response to the Debtor's submission dated 21 May 2008 and states the following facts in relation to each of the above exhibits (lists).
II.
Valuation of work in progress on the MERMAID products as of 30 April 2008
In the exhibit “Balance of work in progress on the MERMAID products“, the Debtor alleges that the total value of these semi-finished products amounts as of 30 April 2008 to 616,000 CZK, without describing the method used by it for the valuation of these semi-finished products. We understand that the Mermaid type is currently in the prototype phase and is not thus a series product, which, if manufactured within continuous series production, could be appraised by a standard accounting method. We believe that the valuation submitted by the Debtor would be challenged by an auditor. The Debtor supports its valuation merely by its solemn declaration.
III.
Balance of inventory in stock as of 30 April 2008
In this respect, the Debtor also presents a summary whose truthfulness and completeness is supported only by a solemn declaration of the Debtor.
In the exhibit “Balance of inventory in stock”, the Debtor appraises the inventory in stock on the basis of the last acquisition cost. Since the Debtor purchases most of its inventory in stock in US dollars, it can be reasonably expected that the appreciation of the Czech crown has had an adverse effect on the revaluation of the inventory in stock and its value is now significantly lower than the value stated by the Debtor. The current exchange rate of the Czech crown is 15.94 CZK/USD. The Debtor purchases inventory in several monthly intervals. For illustration, we refer to the historical exchange rate as of 1 January 2008, which was 18.07 CZK/USD.
IV.
Balance of finished products as of 30 April 2008
In this case, the Debtor also presents a summary and documents its truthfulness and completeness merely by its solemn declaration.
V.
Balance of work in progress as of 30 April 2008
On the exhibit “Balance of work in progress”, the Debtor states that the value of this work amounts to 12,677,873.23 CZK, without describing the method of this valuation (the truthfulness of this statement is documented only by the Debtor's solemn declaration and the Debtor does not present any relevant evidence or arguments).
PricewaterhouseCoopers Audit, s.r.o., registered office Prague 2, Kateřinská 40/466, Postal Code 120 00, Identification No.: 40765521 (hereinafter “PWC“), which had been the Debtor's auditor since 1 January 2007, refused to provide to the Debtor an audit of its operations unless the Debtor removes serious deficiencies of which PWC notified the company's management, specifically Mr. Chip W. Erwin and the Chief Financial Officer, Mr. John W. Mohr, for the first time at the beginning of 2007. Such essential comments also included the method of valuation of work in progress. We have been informed that, to date (i.e. as of 26 May 2008), these deficiencies have not been remedied and no audit of the Debtor's operations for 2007 and no preliminary audit for 2008 have been conducted.
Last but not least, the last item of the list, marked with the product code “Plováky” (Floats), has no official product name and product identificator, but was still appraised by the Debtor at 560,000 CZK. We believe that such item would not be accepted by the auditor.
VI.
List of payables to the state and employees as of 11 April 2008
The amount of the Debtor's payables to the state and employees included in the summary presented by the Debtor was calculated as of 11 April 2008 only, while the Debtor filed its notice with the court on 21 May 2008. We have no knowledge of the reason why this list is dated as of 11 April 2008, particularly with regard to the fact that the Debtor did not reduce its payables, but on the contrary, continues to be in default in making its mandatory payments (i.e. the value of the Debtor's payables to the state and employees is higher than the amount stated by the Debtor).
VII.
List of loans and borrowings as of 11 April 2008
The Debtor submits false information in relation to two loans provided by Komerční banka, a.s. and to a note payable to SLAVIA CAPITAL Group, a.s. Neither Komerční banka, a.s. nor SLAVIA CAPITAL Group, a.s. were the Debtor's creditors as of 11 April 2008 for the following reasons:
- the promissory note issued by the Debtor on the order of SLAVIA CAPITAL Group, a.s., registered office Heydukova 6, 814 99 Bratislava, Identification No.: 31 403 387, for the sum of 11,000,000 CZK, was endorsed, before the opening of the insolvency proceedings (i.e. before 27 March 2008), in favour of the Petitioner, who thus became a proper creditor of the Debtor. The Debtor was advised of this fact by a written notice of SLAVIA CAPITAL Group, a.s., and the liability arising under this promissory note is the liability on the basis of which the Petitioner initiated these insolvency proceedings (by a petition dated 26 March 2008, which was served on the insolvency court on 27 March 2008);
- information published in the insolvency register indicates that both payables of the Debtor to Komerční banka, a.s. were assigned to FAME Jihlava, a.s. It may be assumed that Komerční banka, a.s., as the assignor of these receivables, duly fulfilled its obligation under Section 526(1) of Act No. 40/1964 Coll., the Civil Code, and duly notified the Debtor of the assignment of these receivables. Even if Komerční banka, a.s. had failed to fulfil this obligation to the Debtor (which is doubted by the Petitioner), the Debtor must have learned of the assignment of both receivables of Komerční banka, a.s. to FAME Jihlava, a.s. from the information published in the insolvency register.
Finally, it has to be noted that the value of all payables listed by the Debtor has to be increased by the value of accessories, i.e. by the contractual and late interest (for instance, this is represented in the Petitioner's case by interest at the rate of 9.5% accruing on the amount of 11,000,000 CZK, plus a 6% interest rate accruing on 11,000,000 CZK, plus 1/3% of the note sum).
VIII.
Balance of accounts receivable as of 11 April 2008
The Debtor presents to the court the balance of accounts receivable as of 11 April 2008. It is stated in the title page of this document that the data included therein are based on balances of 2007, which has not yet been audited (notwithstanding the fact that, pursuant to Section 128, the Debtor's financial statements (together with their audit) should be presented, within the shortest possible time (not later than by the end of June of this year), to the general meeting for approval and should be filed with the collection of documents kept by the register court).
IX.
List of advances received as of 11 April 2008
The Petitioner has the same comments regarding this exhibit as its comments on the exhibit “Balance of accounts receivable as of 11 April 2008” (see clause VIII. above).
X.
List of accounts payable as of 11 April 2008
The Petitioner has the same comments regarding this exhibit as its comments on the exhibit “Balance of accounts receivable as of 11 April 2008” (see clause VIII. above).
XI.
List of advances paid to suppliers as of 11 April 2008
The Petitioner has the same comments regarding this exhibit as its comments on the exhibit “Balance of accounts receivable as of 11 April 2008” (see clause VIII. above).
XII.
Income statement as of 31 December 2007
The Debtor submits that the data included in the income statement are based on balances of the year 2007, which has not been audited yet (see clause VIII.).
The Debtor submits that the company's loss for the financial year 2006 amounted to 25 million CZK and its loss for the financial year 2007 amounted to 33 million CZK. The information presented by the Debtor thus indicates that the Debtor's operations have reported a long-time loss, which increases every year.
Moreover, the income statement cannot be considered as complete, because it lacks the signature of the person responsible for compilation of the financial statements and the signature of the statutory body which is the accounting entity (the same remark also applies to the balance sheet as of 31 December 2007, the income statement as of 30 April 2008 and the balance sheet as of 30 April 2008).
XIII.
Balance sheet as of 31 December 2007
The Debtor submits that the data included in the income statement are based on balances of the year 2007, which has not been audited yet (see clause VIII.). The Debtor further submits that while its equity amounted for the financial year 2006 to 28 million CZK, it amounted as of 31 December 2007 to –5 million CZK (negative equity). This document presented by the Debtor also indicates the negative result of the Debtor's operations.
XIV.
Income statement as of 30 April 2008
The Debtor submits that the data included in the income statement are based on balances of the year 2007, which has not been audited yet (see clause VIII.).
In this document, the Debtor states that the profit before taxes for the relevant financial year reached ca 9 million CZK. If we extrapolated the profit stated by the Debtor (not including the increasing tendency), the Debtor submits that, according to its expectations, its profit will reach as of 31 December 2008 about 27 million CZK. This means that, despite all negative impacts on the Debtor's management (particularly the impact of the depreciating US dollar), the Debtor would succeed in reversing the negative business result and increase it by 60 million CZK compared with 2007, which is definitely a remarkable (but not realistic) result.
XV.
Balance sheet as of 30 April 2008
The Debtor submits that the equity for the period amounted to 3 million CZK, i.e. increased by 8 million CZK compared with the previous period.
It is surprising that, despite the Debtor's allegation that it has achieved a profit in this period, such fact has not been reflected in the actual results of the company. The Debtor failed to reduce its social service payables and its payables to health insurance companies (on the contrary, these payables are increasing, due to which the Debtor's executive exposes himself to potential criminal prosecution), fails to pay wages to its employees, has failed to pay the note payable to the Petitioner and its other liabilities to other creditors.
XVI.
Comments on the Debtor's management
The economic situation of the Debtor has been unfavourable for a long time (in the course of the year, the Debtor faced liquidity problems, since it had no funds to pay wages to its employees. At the same time, it has long-term overdue liabilities). By the end of 2007 (4 December 2007), execution proceedings were initiated against the Debtor; however, the company's executive, Mr. Ch. W. Erwin, has concealed this fact not only from creditors, but according to a statement of SLAVIA CAPITAL AERO (SC AERO) LIMITED, also from the company's members.[BB1]
Since last November, the members have been unable to agree on the method of resolution of the dissatisfactory condition of the Debtor. Proposals for discharge of the company's debt were refused. PWC (authorized to conduct the Debtor's audit) warned the Debtor systematically of the dissatisfactory situation in bookkeeping, stating that if the Debtor fails to cure such situation, PWC will not provide audit to the Debtor. Despite these warnings and opinions of the auditor, the Debtor's accounts have not yet been corrected until now to comply with the law.
Since the Debtor's executive Mr. Chip W. Erwin did not allow the other executive of the company, Mr. Francis John Nosek III., active involvement in the business management of the company by preventing him from access to information about the company's management, the Debtor's executive Mr. Francis John Nosek III decided to resign from the post of the executive (see the exhibit taken from the collection of documents maintained by the Regional Court in Brno).
The Debtor continues to be incapable of elementary material reproduction. The company uses material in stock. Since the beginning of 2008, the Debtor has failed to make statutory payments on behalf of its employees. The Debtor has also failed to pay wages to its employees for April and May. The Debtor has overdue payables to Aircraft Industries, a.s. (the owner of the area where the manufacturing workshop of the Debtor is located). As early as in December 2007, Aircraft Industries, a.s. disconnected the supply of electricity and heat to the Debtor due to the Debtor's failure to pay its liabilities and bad payment morale. The same sanction threatens the Debtor now as well.
The audit of inventory in stock for the year 2006 identified a shortage in the amount of 15 million CZK). In 2007, the audit also found material discrepancies in the balance and value of inventory.
Finally, we would like to point out that, according to our information, Mr. Chip W. Erwin possesses extensive experience with bankruptcy proceedings, since he was involved by himself in Nextair, s.r.o., which had the same object of business activities and which is now bankrupt.
XVII.
Conclusion
The Debtor (or its executive Mr. Ch. W. Erwin) is currently solving the dismal situation of the company by selling work in progress (i.e. products which have been allocated a manufacturing number and for which the customers have already paid advances) to any customer who is willing to pay in cash (without delivering the products to customers who have duly paid advances for them). The above practices of the Debtor were supported by the submission of Mr. Leonardo do Sayago of AEROMARINE, Lda, which was served on the insolvency court on 23 May 2008 (a Czech translation of this submission shall be presented by the Petitioner to the insolvency court in the nearest future). The biggest customer with whom the Debtor currently cooperates on this basis is Sprite Aviation.
By such conduct, the Debtor, or its executive, exposes himself to potential criminal prosecution. At the same time, such conduct of the Debtor damages the assets and significantly reduction possible satisfaction of the Debtor's creditors.
The Debtor currently lacks sufficient security of its manufacturing facilities, due to which it is threatened by potential embezzlement and theft, resulting in decrease of the assets from which the creditors should be satisfied.
The Petitioner believes that, based on the foregoing, it is in the interest of all involved parties (creditors and members)
to appoint a preliminary insolvency trustee,
who will provide objective information about the Debtor's management and will ensure further operation of the company within the necessary period in accordance with the existing possibilities.
Such preliminary trustee should be charged, in particular, with taking steps necessary to identify and to secure the Debtor's assets. Furthermore, the preliminary trustee should be charged with a review of the Debtor's books of account (which show a number of fundamental discrepancies). At the same time, it would be appropriate for the preliminary trustee to direct the Debtor's conduct and to handle the assets in a way preventing any further damage to the creditors caused by the Debtor's conduct.
COMINVEST ASSOCIATED LIMITED
--------------------------------------------------------------------------------
Has the execution on [BB1] CZAW's account actually been initiated?
There is more to this than initially meets the eye.
There has been a power struggle going on for the last couple of years between Chip Erwin who owns 46% of CZAW and Slavia Capital who own about the same amount. Each wants total control.
This the 2nd attempt to file a banckruptcy petition against CZAW.
Slavia Capital filed one earlier this year but at the hearing in early May the judge kicked it out.
No one has much at stake , only a basic deposit because when you buy you don't pay until the kit is ready for shipment.
There has been a power struggle going on for the last couple of years between Chip Erwin who owns 46% of CZAW and Slavia Capital who own about the same amount. Each wants total control.
This the 2nd attempt to file a banckruptcy petition against CZAW.
Slavia Capital filed one earlier this year but at the hearing in early May the judge kicked it out.
No one has much at stake , only a basic deposit because when you buy you don't pay until the kit is ready for shipment.
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GrahamSprite
- Posts: 1
- Joined: Sun Jun 08, 2008 11:57 am
Perhaps some facts might help. I don't know who posted the petition for administration on this forum. If you take the time to read it, you will find it is a petition not a ruling. I think we should leave that to the Judge. Anyone who is involved with this aircraft knows that this is part of an aggresive take over bid by part owners of CZAW. This has been going on since Christmas and despite the difficulties caused by muck spreading and general underhand tactics, CZAW have delivered 27 good quality kits this year for UK members. CZAW are not in administration, bankrupcy or any other type of non standard arrangement. CZAW despatched two more kits for UK customers yesterday and we have already planned the next 6 deliveries with two more next Friday.
Do not believe all you read on the forums. The CZAW distributors worldwide are fighting back with legal actions against the part owners who unbelievably are trying their hardest to destroy the company and the excellent aircraft they make.
We must wait for the Judge to decide if CZAW will continue with the present management or allow the other party to take over. Only time will tell but one thing is certain. Whoever takes control of the company, the Sportcruiser will continue to be manufactured and we will continue to support UK customers.
Do not believe all you read on the forums. The CZAW distributors worldwide are fighting back with legal actions against the part owners who unbelievably are trying their hardest to destroy the company and the excellent aircraft they make.
We must wait for the Judge to decide if CZAW will continue with the present management or allow the other party to take over. Only time will tell but one thing is certain. Whoever takes control of the company, the Sportcruiser will continue to be manufactured and we will continue to support UK customers.
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Joe Iszard
- Posts: 60
- Joined: Mon Jan 07, 2008 4:36 pm
- Location: suffolk
Sorry, yes I used the wrong word - It should have been Petition,
My posting was to stop the innuendos and wild guesses that were beginning to be posted.
However, as my old dad used to tell me "mind your own business boy" This I should have done!
The Sportcruiser is a well engineered aeroplane; the back-up from the company and agent has been exemplary.
My posting was to stop the innuendos and wild guesses that were beginning to be posted.
However, as my old dad used to tell me "mind your own business boy" This I should have done!
The Sportcruiser is a well engineered aeroplane; the back-up from the company and agent has been exemplary.