The Marinopoulos supermarket chain, one of the biggest in Greece, applied for Bankruptcy in Operation. An Athens court will discuss the request on July 1st, 2016 and until then the company will have protection from its creditors. The move is considered a big blow with a possible domino effect threatening to send 11,000- 13,000 people to unemployment. The Company with 700 stores across the country is said to owe 500 million euro to some 2,500-3,000 suppliers, while the debts to the state and social security funds are over 40 million euro. Debts to banks are worth mentioning as well.
The development comes as an agreement worked out at the beginning of the year with rival Sklavenitis to form a joint company in order to manage and exploit 33 of Marinopoulos’ “hyper stores” appears to have stalled this month.
In May, four stores with the new log return to operation, but according to some sources, “in June problems with suppliers started again with the effect that the new deal with Sklavenitis was frozen.”
The company has also tried to work out a restructuring plan with banks and repayment plan with suppliers, with mixed results to date.
According to some reports Marinopoulos submitted request for protection from suppliers to prevent them from entering the stores and seize their products from the shelves. The company is said to secure protection for two months to either renegotiate with Sklavenitis or with some hedge funds.
Until the late 1990s the Marinopoulos super markets were operated as Prisunic-Marinopoulos in cooperation with the 1997 closed French chain Prisunic.
In 1995 company Carrefour Marinopoulos was formed as a 50-50 joint venture between the Greek Marinopoulos Group and the French Carrefour Group, but, in 2012, Carrefour decided to withdraw from the joint venture due to the Greek crisis.
Some claim that it was the mismanagement that took the company to bankruptcy, others blame the fact that Marinopoulos expanded during the economic crisis and thus applying a catastrophic policy by offering big discounts to beat its competitors.
“Pulling back payments to its suppliers it even more knocked down prices to the point that it suffered big losses, yet with the view in market concentration – that is, creating problems for the competitors who were either be forced to be sold to Marinopoulos or close. This commercial behavior triggered the highest competition in the supermarket sector. It was a desperate plan to secure cash, i.e. liquidity,” notes in.gr adding that at the very end this behavior triggered more problems and losses as “the supermarket saw itself caught in a vicious circle: “it was obliged to make big discounts or customers would stay away.”
The company had two new loans from banks in 2015, while in spring of the same year it bought two retail chains. In spring of 2016, the company was in talks with Greece’s systemic banks.
“By end of 2014, Marinopoulos operated a total 705 stores: 254 of them – 35 hypermarkets, 204 supermarkets, 15 Carrefour Express – were of its own operation and 451 stores -82 super markets, 177 Carrefour Express, 99 OK Any Time Markets and 93 Smile – via Franchise. The number of employees was 9,949.” Details about Marinopoulos financial obligations here in Greek.
UPD: Citing the company’s economic data from 2015, Greek media report on Wednesday, that debts mounting €1.3 billion. “Obligations to the state are 100 million, to tax authorities 49 million and to social security funds 51 million. Loans from banks and other companies are 337 million and obligations for leasing 159 million. Debt to employees are some 4.4million.”
According to argumentation of the company, in case of bankruptcy “the amount that can be collected from the sale of assets will not exceed 279.1 million, enough to cover just 21.7% of creditors’ claims.”
The plan foresees: 100% payments to social security fund IKA, employees and tax authorities, 93.46% payments to the banks, while the suppliers will have to share among themselves only 5.09% from what they are supposed to receive.
The suppliers are angry, they fire accusations against the company through their legal consultant and want the launching of bankruptcy procedures.
The company has submitted also a consolidation plan, providing banks/leasing repayment in 15 years with interest euribor +3, repayment of suppliers in 15-year horizon, payments to state and tax office in 180 installments, payments to employees in one year.
On Wednesday, three more submissions for bankruptcy were filed by other 3 Marinopoulos companies (mother company Marinopoulos BrosSA, Express & XynosSA, adding another 490million euro to the debt of 1.3 billion.
On Friday, Marinopoulos’ request for protection from creditors was accepted. The official bankruptcy request will be examined on 21. September 2016.
Sklavenitis expressed the wish to help the company provided it had no hidden debts.
Market people give 50-50 chances that the deal will be sealed and many wonder how the company will manage to come through the summer, if suppliers will accept to give goods only against cash.
The market follows the developments holding its breath as the impact and the domino effect could harm more than 15,000 people and their families – that would be equivalent to the population of a Greek town.