Friday 27 January 2023

Casa Blanca shuts it doors

Casa Blanca begins closure and dismissal of employees due to liquidation of the company

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27 January 2023 - At The Banks - BCCR

Paying the bills


QCOSTARICA – Almacenes Casa Blanca began closing its stores in the country and laying off its workers as part of the company’s liquidation process. Francisco Luis Vargas, attorney for Land Business S. A, owner of the retail chain, confirmed to La Nación that the company had already informed the Bankruptcy Court of the beginning of the process.

Almacenes Casa Blanca began, a month ago, the process of closing stores throughout the country and laying off part of its almost 300 employees

Vargas explained that due to the cessation of the operation, the company will lay off all its workers, without detailing the number of stores already closed, nor the number of people being let go.

The general manager of the retailer, Carlos Murillo, said “Don Francisco Luis (Vargas) is the person who can attend (the queries). I am not authorized (to talk about the layoffs). I am also an employee and I have to follow orders.”

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The closing of the 38 stores across the country at the start of 2022 began a month ago, while the majority of the 292 employees were laid off in the last two weeks after Land Business gave up saving the company because the creditors, mainly banks, rejected the rescue plan.

Casa Blanca went to the Bankruptcy Court in January 2017 to face a liquidity problem and to be able to renegotiate its financial debts. When the legal process was filed, the company’s liabilities amounted to ¢38.2 billion colones, but the company achieved several payment arrangements to reduce it.

The company’s growth strategy was devised with store openings and sales through loans

The last proposal of Land Business, to avoid closing, proposed to pay off a debt of ¢20.5 billion colones and interest for ¢7.99 billion in 15 years.

The genesis of the company’s difficulties began in 2012 when a strong growth strategy was devised with store openings and sales through loans – payment plans – to its customers.

To achieve this objective, the company established short-term loans (six months), also known as revolving loans, with financial entities. However, it granted its clients longer-term financing, which generated an income mismatch and a liquidity problem.

One more creditor

Workers must go to the Bankruptcy Court and appear as one more creditor, along with the financial entities and the company’s suppliers, to receive benefits, according to the company lawyer.

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The situation is explained in the dismissal letter delivered to employees, where the company states it “will not be able to directly pay the labor debt (…) and extends this certification so that the collaborator (worker) can assert their rights and legalize their claim before the Bankruptcy Court under file 17-000001-0958-CI”.

In the letter, the company explains that the payment proposal presented in court was not approved by the Board of Creditors. “(The) decision had negative impacts on the business and it has been forced to reduce the size of its operation with a view to a possible liquidation,” states the letter.

“The (labor) liquidation is a legal process. Workers like any creditor have to legalize their claim in the process and that is where they are paid. It is not the company that pays, but it is during the process. They have to claim that (their benefits) within the judicial process,” explained Vargas.

The lawyer said that the law gives labor creditors a privilege over the rest of those affected by the closure of a company.

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