Baltika: unexpected market situation demands company’s reorganization
Court approved Baltika AS Management Board’s request to execute, in the current market environment, reorganization measures helping to solve temporary payment problems and supporting finalization of the successfully started strategic turnaround. “Baltika will continue daily business operations and in parallel will start reorganization to ensure the company’s sustainability. We have to admit, that COVID-19 crises in our home markets in Estonia, Latvia and Lithuania has drastically impacted fashion sales, which has led us to temporary payment problems, “ said Baltika CEO Mae Leyrer.
Baltika Supervisory Board supported management’s reorganization proposal. Supervisory Board member Kristjan Kotkas noted that, Baltika has, as promised, carried out first stage in the strategic turnaround and next stage goal was to focus on top line increase. In light of the COVID-19 crises, this target has been severely hit. “Most of the businesses today, are facing temporary payment problems. Emergency state has been announced in all of our home markets and it is apparent that consumers will purchase only essential items at this time. Baltika aims is to continue business operations, and to manage the payment difficulties we applied for reorganization remedy. This allows us to execute temporary measures supporting the development of positive cash flow that leads to the ability to meet current obligations. “ said Kotkas.
“We ask from all of our collaboration partners understanding and commitment to mutually open communication. Considering the number of Baltika’s collaboration partners and the fact that they are also affected by the crisis environment, it comes without saying that as partners understand our situation, we will understand theirs. We will do all in our power to continue our business with our partners in the long term. We are confident that reorganization helps us overcome the temporary difficulties,” added the Supervisory Board member.
Baltika CEO Leyrer noted that, while battling the unexpected crises, it is difficult for the company to meet historic obligations in their entirety. “Timing of the COVID-19 crises comes to us very unfortunately, as we focused last year on exiting unprofitable business activities which carried along planned one-time expenses. In addition, Baltika outsourced all production as of last year and the company does not consider it feasible to satisfy claims against production related daughter company, “ she added.
The reorganisation only concerns AS Baltika, not any other Baltika Group entities.
Baltika Group is the largest fashion design and retail company in Baltics, owning 79 shops in Estonia and its neighboring countries and employing 539 people. Under normal circumstances Baltika shops receive over 7,7 million visits and about 850,000 purchases are made annually.