Orphanides Public Company Ltd is under receivership, owing Laiki Bank and the Bank of Cyprus at least €140 million, a further €10 million to other creditors, and €85 million to suppliers. The company, which has not yet been declared insolvent, has sued Laiki and its successor the Bank of Cyprus for loss of future income. The lawsuit claims Laiki violated loan and other credit agreements between 2011 and 2013, and alleges Laiki defrauded them and conspired to financially damage the company and shut down its operations through actions and omissions taking place between 2011 and 2013. The lawsuit also accuses Laiki of negligence and/or violating their legal duties in relation with the provision of consultation services. Orphanides is asking for €2.2 billion.
With Laiki now under resolution, Orphanides’ loans and assets have now been transferred to the Bank of Cyprus. The chain’s problems became evident last year when a minority of large contractors stopped supplying them. Its founder, Christos Orphanides, said at the time the company’s troubles went for more than a year before that. At the time, Laiki and theBank of Cyprus rejected the appointment of an administrator to oversee a restructuring. It is now under receivership by two administrators, one appointed by the former Laiki Bank (the chain’s largest creditor), the other nominated by Orphanides himself.
Before Orphanides’ troubles became too large to conceal, a former Bank of Cyprus executives had urged caution in running a story, citing the need to keep the company afloat.
Employing some 2,000 drivers and packers on the supply end and 1,250 for Orphanides, the supermarket chain was deemed too large to fail and the employers and industrialists federation OEV even warned last year that the consequences of letting the company collapse would be huge. Efforts by suppliers to take over management of some outlets and form a new entity failed to attract enough of the major suppliers to make it viable. Only six of the chain’s 29 stores still operate; Paralimni, Larnaca, Kiti, Limassol Mall, Mouttagiaka Express and Paphos Mall.
The lawsuit was filed in Nicosia district court by Phoebus, Christos Clerides & Associates. Christos Clerides could not be reached for comment.
Source: Cyprus Mailhttp://cyprus-mail.com/
