Jindrichuv Hradec narrow-gauge railways belly up, over CZK 160 million in debt

JHMD trains. Credit: JHMDJHMD trains. Credit: JHMD

At the end of June, the company had 140 creditors and owed CZK 160.7 million with no money to repay.

Ceske Budejovice regional court has opened insolvency proceedings with Jindrichohradecke mistni drahy (Jindrichuv Hradec Local Railways or JHMD), which operates trains on narrow gauge railways. The company has filed an insolvency petition. At the end of June, it had 140 creditors and owed CZK 160.7 million. The company has no money to pay back, arguing that the Vysocina Region does not compensate sufficiently for the company’s verifiable losses and does not pay for the depreciation of vehicles.

Raiffeisenbank terminated the company’s loan agreement early in April and the company has to pay over  CZK 56 million in debts. Another CZK 4 million is due to the Tax Office for the South Bohemia Region, as follows from the insolvency register. The insolvency does not restrict operations on the lines. The company has a reorganization plan that was accepted by a majority of its creditors, Boris Cajanek, chairman of the JHMD board of directors, told Czech News Agency (CTK) today. The reorganization plan hopes that relations with the Vysocina Region will be straightened out, it will be possible to sell part of the assets, temporarily postpone the maturity of debts, or increase the share capital and issue new shares.

The company said that it has incurred a permanent operating loss of CZK 108 million from 2010 to this year. It also said that the Vysocina Region had failed to reimburse CZK 16 million for the same period for the use of the transport route and that the region had also refused to reimburse over CZK 37 million for vehicle depreciation. Vysocina Region President Mr. Schrek told CTK in May that the region was acting per its contract with the JHMD.

Last year, the company asked the court for a moratorium; this was in force for six months. The measure protected the operator from creditors. The company said on its website afterwards that it was negotiating with creditors and shareholders to secure its future. The company has not had the necessary contract amendment with the Vysocina Region since 2018. The company has filed lawsuits against the region. According to Cajanek, the region is not fulfilling its obligation to pay for proven transport losses on the narrow gauge railway.

The contract between the region and the carrier expires in autumn 2024. The Vysocina Region is considering providing essential services by buses instead of trains. Only tourist trains would then run on the narrow-gauge line between Kamenice nad Lipou and Obratan. The company has a contract with the South Bohemian Region until December 2024. The value of the five-year contract is CZK 163 million. South Bohemian representative Antonin Krak told CTK in May that he believes JHMD is fulfilling the contract with the region.

JHMD owns and operates narrow gauge railways from Jindrichuv Hradec to Obratan and Nova Bystrice. It owns three steam locomotives, three diesel locomotives, eight passenger cars, and one freight car and employs about 80 people.

 

Edited and translated by Lucie Trávníčková.

Tagy JHMD Jindrichuv Hradec local railways narrow gauge railways
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