The trustee for Adria Airways (Ljubljana), Janez Pustatičnik, has filed a EUR78 million euro (USD77.3 million) compensation lawsuit against the German former executives of the Slovenian flag carrier for the damage they caused to creditors by allegedly financially exhausting it and sending it into bankruptcy, the investigative website Necenzurirano (Uncensored) reported.
Adria Airways suspended almost all flight operations on September 24-25, 2019, amid a liquidity crunch, before filing for bankruptcy and cancelling all remaining scheduled flights on September 30. In early spring 2021, Slovenia’s National Bureau of Investigation (Nacionalni preiskovalni urad - NPU) filed criminal charges against four unidentified individuals over EUR3.6 million (USD4.4 million) missing from the carrier’s accounts.
The latest lawsuit has reportedly been filed against Arno Schuster, who was appointed Adria’s CEO after it was acquired from the state by the German fund 4K Invest in 2016 and who resigned in 2018, his successor Holger Kowarsch who eventually initiated the bankruptcy, and other members of the company management after the 4K deal. Schuster and Kowarsch were also partners in 4K Invest.
By the time it was reported in June 2020 that the NPU had conducted searches at various locations in and around Ljubljana as a part of its investigation into the bankruptcy, creditors - including suppliers, lessors, airports, employees, and consumers - had lodged claimed amounting to EUR150.9 million (USD171 million at the time, USD150 million now) from Adria’s estate, considerably more than the sum of its assets.
Pustatičnik’s lawyers, after a comprehensive audit of the business, concluded that the former directors had violated Slovenia’s insolvency legislation as they allegedly knew Adria Airways was insolvent but did not take action. Instead of asking 4K Invest to either pay in additional capital it had promised or seek bankruptcy protection, they tried to patch up the problems with questionable accounting gimmicks, sources close to the probe told Necenzurirano, and as a result they are legally responsible for paying the difference between the creditors’ claims and the assets being sold from the estate.
But, the news site pointed out, the former executives have largely covered their tracks by allegedly deploying further accounting tricks. 4K Invest vanished from the business registers of several countries a few weeks after the bankruptcy, and all traces of its activities have since been deleted from the internet. Kowarsch, Schuster, and other key 4K Invest individuals such as Martin Vorderwülbecke have long since taken up other positions in the corporate world.
The trustee has by now cashed out the majority of the estate of the former Slovenian national carrier, including its brand, but the bankruptcy process continues.
