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Dentons Assists Motorpal With Emergence From Insolvency

Dentons Assists Motorpal With Emergence From Insolvency

Czech Republic
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Dentons has advised automotive parts manufacturer Motorpal on the successful implementation of a pre-pack reorganization.

Motorpal is a manufacturer of fuel injectors for diesel engines. The company’s products include injection pumps, injection valves for diesel engines, and other products supplied to vehicle producers (including balancing shafts, piston pins, and tappets). Major customers include Zetor, Deutz, and MMZ. Motorpal has production plants in Jihlava, Jemnice, Batelov and Velke Meziricí. It has almost 1,250 employees. In 2016, the company celebrated its 70 year anniversary.

With Dentons' assistance, and after successful negotiations, approval, and implementation of the reorganization plan, the company has now emerged from insolvency. As a result, Dentons reports, Motorpa will save more than 1200 jobs in an economically disadvantaged region of the Czech Republic.  The Motorpal case is the first successful pre-pack reorganization in the Czech Republic to obtain the strong support of senior secured lenders.

“We are happy about the outcome of the case," said Dentons Partner Jiri Tomola, the Head of Dentons’ Restructuring, Insolvency and Bankruptcy practice in Prague. "It's a great success for both Motorpal and its creditors, and for the Czech economy. Having represented Motorpal throughout this long journey, we believe the company has great potential and the restructuring has added significant impetus for further development. The case is also important from a legal perspective. It will serve as a precedent and create more space for the use of pre-packed reorganization in practice.”

Motorpal filed its insolvency petition together with a reorganization plan with the Regional Court in Brno on January 15, 2016. Despite the fact that the pre-pack reorganization plan had the overwhelming support of the creditors, the regional court in Brno rejected it based on formalistic grounds. Dentons successfully represented the client at the Constitutional Court of the Czech Republic, claiming that the Regional Court’s rejection of the plan violated the client’s right to a fair trial. The Constitutional Court found in favor of Motorpal – overturning the Regional Court’s decision and allowing the company to resubmit its reorganization plan. The plan was approved by the majority of secured and unsecured creditors and obtained approval from the Regional Court in September 2016. 

On February 21, 2017 the Regional Court in Brno issued a resolution stating that Motorpal had fulfilled its reorganization plan and was out of insolvency.

Due to the complexity of this restructuring deal, Dentons reports, the firm "brought together a cross-practice team including Restructuring, Insolvency and Bankruptcy, Corporate, Banking and Finance, and Litigation and Dispute Resolution." The firm's team, led by Tomola, included Counsel Juraj Alexander (who left the firm during the transaction), Associates Vaclav Zalud and Martin Fronek, and Junior Associates Vojtech Novak, Katarina Kucharovicova, and Jan Kralicek.

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PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

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