Romanian state-owned rail freight operator CFR Marfă is entering insolvency proceedings. The company is severely indebted, with its fate being near-certain: liquidation. Insolvency proceedings are likely a way to postpone the inevitable.
The transport ministry approved CFR Marfă’s request for insolvency after it obtained approval from the operator’s shareholders. With the company’s entry into insolvency proceedings, it is leaving a five year-long state of negotiations with its creditors.
Under Romanian law, those negotiations (“Concordat preventiv”) gave CFR Marfă the opportunity to find a way out of its financial problems without entering into official insolvency proceedings. That has evidently been unsuccessful, and contrary to no one’s expectations. The company owes hundreds of millions of euros to the government after the European Commission declared its state aid illegal. CFR Marfă’s main creditor has already officially established a successor to the rail freight operator – Carpatica Feroviar.
Liquidation
CFR Marfă now heads into the next stage to buy time before its seemingly inevitable liquidation. The insolvency proceedings are expected to end with the sale of the company’s assets to Carpatica Feroviar and the disappearance of CFR Marfă. The new operator is supposed to take over its predecessor’s business, without taking on the company’s multimillion euro debt.