Agrokor Gets Croatian Restructuring Recognized in U.S. Court

A New York bankruptcy judge on Friday granted Croatian food and beverage giant Agrokor U.S. bankruptcy protection while the company works through its restructuring deal in its home country.

U.S. Bankruptcy Judge Martin Glenn signed the order giving the company’s U.S. assets Chapter 15 protection while its restructuring is underway, saying there were no unresolved objections to the motion.

Agrokor filed the motion in July seeking to shield itself from legal actions that could be brought by stakeholders in the U.S. while it finishes executing a massive restructuring settlement reached earlier this year with creditors. The company said any U.S. claims can be addressed through proceedings in Croatia.

U.S. counsel for the debtors did not immediately respond to requests for comment late Friday.

Agrokor, the biggest employer in the Balkans, was put under state-run administration more than a year ago after an overly ambitious expansion drive left it weighed down by borrowings and a loan from Russia's Sberbank proved insufficient to avoid insolvency.

Sberbank and VTB, another Russian banking giant, hold roughly 47 percent of the company’s unsecured financial obligations, according to court papers.

Under the restructuring deal, which was confirmed by a Croatian court on July 6, Agrokor will “deleverage the current business to make it viable going forward by converting large portions of the prepetition unsecured debt into equity” of a new corporate group and “structurally subordinated debt instruments,” representatives for the company said in court filings.

Under the settlement, Dutch and Croatian holding companies will take over the new Agrokor, with Croatian and foreign subsidiaries. Company representatives said the new structure will reduce systematic risk, “increase transparency and accountability of the individual businesses,” “focus efforts on core businesses” and “maximize flexibility for any future sale of business units.”

The Agrokor Group counts among its primary businesses Croatia’s largest supermarket chain, largest producer of mineral and spring water, and largest producer and distributor of ice cream and frozen foods, the company said. Pulling in roughly €6.5 billion in annual revenue, Agrokor’s earnings represent “approximately 15 percent of the gross domestic product of Croatia,” the company said.

The foreign representative for the debtors is represented by James H.M. Sprayregen, Adam C. Paul, Daniel Rudewicz, Brad Weiland and Whitney Fogelberg of Kirkland & Ellis LLP.

The case is In re: Agrokor D.D. et al., case number 18-12104, in the U.S. Bankruptcy Court for the Southern District of New York.