RIGA - REWE Group, a majority shareholder in the Lithuanian parent company of Palink, the operator of the Iki and Cento chain stores, has filed an official complaint to the European Commission over Latvia’s Insolvency Law and the insolvency proceedings launched against Palink by the Riga Kurzeme District Court.
Palink representative Velga Ozola said that REWE Group claims in the complaint that an infringement procedure be started against Latvia, writes LETA.
“If the law, which violates European regulations, is not revised, and if the unlawful situation is not revoked, the Court of Justice of the European Union will order heavy financial sanctions,” warned Ozola.
REWE Group believes that the Insolvency Law of Latvia is not in line with the European Union’s regulations and the EU Charter of Fundamental Rights. Because of the faulty law, a financially sound company may see its properties auctioned in the coming days or weeks, REWE Group notes in the petition.
“The possible auction of Palinkassets threatens not only the company’s investments of 123 million euros in Latvia, but also more than 1,200 jobs. A major drop in turnover at Iki and Cento stores can be observed already now,” explained Ozola.
The company is determined to use all legal opportunities, and even turn to the EU Court of Justice.
Palink previously said that the insolvency procedure against the company had paralyzed the management of Palink, which is why the planned investment of 3 million lats (4.2 million euros) in Latvia this year had to be put off.
Palink said it was losing at least 300,000 lats each week due to the court’s insolvency ruling.
Palink was ruled insolvent by the Riga Kurzeme District Court on Jan. 5. But on Jan. 13, Prosecutor General Arvids Kalnins handed in an official protest to the Supreme Court Senate’s Civil Cases Department over the court’s ruling on Palinkinsolvency.
The insolvency case against Palink was opened following a petition filed by private individual Sergejs Guscins, who claimed that Palinkhad not paid for work done by the construction company Landekss.
Palink turnover was 73 million lats in 2010, which is 65.9 percent more than in 2009, when the company turned over 44 million lats.