Construction giant went bankrupt with ten billions in debt – creditors got almost nothing
Not the biggest but one of the most notable bankruptcy case of the recent years in construction business was the one of Gropius Zrt. The construction and real estate giant had been accused by insolvency years before but they managed to escape from the bad media by a successful lawsuit. Not like in 2011, when their debts rose upon the very sum of 13 billion forints. Despite the high deficit, the company’s death was directly caused by a new shopping mall project and the reconstruction works of the old Hunyadi-barracks located in the city of Kaposvár. The project’s loans were denied by the Bayerische Landesbank which caused a collection claim by its Hungarian affiliate bank MKB. The liquidation procedure was initiated in April 2011 and got to the Metropolitan Court’s decree in October. Now the process shows a pretty small loss on the side of the supporting banks, investors and owners but hundreds of millions remains in debts to subcontractors.
The company which built plenty of the supermarkets of Tesco, Spar and Plus and was planning a forthcoming investment on the Budapest Danube side was controlled in fifty-fifty shares by Gábor Szőts and Gyula Csáktornyai. According to our sources this two man were the only who came out from the story with profits, even though one of them paid a hundred million debts just after being assaulted and the other is now taking a refuge to avoid such actions. Gropius was founded in 1999 and it has been the first enterprise of these two young engineers and became a great success with different tricks and fruitful relationships. Our sources suggested that Csaba Apáti and Györgyi Beer could be only strawmen as founders of the firm, which is quite believable regarding as they sold their shares to Szőts and Csáktornyai. The immediate rise of the company’s stock prices to their double in only three months supposes that Gropius had a mysterious supporter as well. After the first year’s income of 300 million forints Gropius made six billion in 2004 with a capital of two and a half billion. In 2010 the company hired three workmen and 71 intellectuals and had been one of the country’s biggest construction companies.
Gropius’ property businesses were done in quite ‘interesting’ ways: they bought lands exactly on the specific places where supermarket firms planned to build a new store. Gropius won the tenders for the construction works and they also leased the land for their partner companies. After reaching the one billion incomes in 2002, Gropius started to build residential parks with different project companies for each.
The project that drove Gropius’ financial position to descent was the Duna-City investment, a giant construction plan situated on the riverside where the 9th district meets the Csepel Island. The project seemed too heavy for the company, therefore they shared ownership in the project company with the Quaestor group. Duna City Kft. spent 2.7 billion forints to build the new Kvassay road that connects Csepel Island with the busy Könyves Kálmán körút and for the public utilities on the property that cost four billions. MKB Bank mortgaged the project company three times. In the mean time Gropius owed 170 million to its subcontractors and it is really strange that the last mortgage by the bank was made two months after the liquidation procedure was initiated and that they were also able to win some public procurement tenders in the 13th district and in Szigetszentmiklós.
The first liquidation procedure had been initiated by an unpaid subcontractor in 2008, but it took two years for the court to order the liquidation on appealable level. Although the appeals have to be filed in 15 days, Gropius did it on the 61st day and the Budapest Tribunal did not deny it. The new and final procedure which had been initiated in April 2011 took only six months.
The company’s incomes declined with a dramatic 190 million from 2010 to 2011 but the owners and the liquidator still tried to convince the subcontractors to finish the works in order to get their money. It became clear that the owners did everything to earn money is the same time and they did it in creative ways. According to the creditors, the council of Szigetszentmiklós transferred their kindergarten constructions price to an other company owned by Csáktornyai right the day after the bankruptcy announcement. The council says, they signed the permission contracts for this strange transfer the day before Gropius went bankrupt. Another scandalous event is referred to the Gropius case: outraged subcontractors made a blockade around Lidl’s centers and supermarkets in Budapest, Szigetszentmiklós and Székesfehérvár last year. The reason was that they got only three million forints for the works which worth ‘a bit more’.
In the creditors opinion it was clear that even one year before the insolvency announcement Gropius was unable to pay. The company’s strategy was to try to get as many works done by the subcontractors as possible. Now 5.1 billion forints of the confirmed claims are kept on count of mortgages. The company owes 3.17 billion for its large-scale business partners and 255 million to the small ones. It seems to be clear that the supplier claims in the value of 3 billion are not going to be settled. Csáktornyai was forced to pay some debts by power two times and as our sources reported some gang members offered their services to many other creditors. But the ones who do not accept these bids still refuse to speak out with names as they are afraid of losing other big companies’ partnerships.