PKP Cargo to commence remedial proceedings

The Polish national rail freight operator PKP Cargo filed a motion with the District Court for the Capital City of Warsaw to commence remedial proceedings to try and save the company. PKP Cargo stated that this is not a declaration of bankruptcy, but specified that the outcomes would be roughly the same: a massive restructuring.

The main difference between the remedial proceedings started by PKP Cargo and a traditional bankruptcy is that the company’s restructuring remains in the hands of the debtor. “If the Court accepts the motion, an administrator will be appointed on the day of opening the restructuring proceedings, who will supervise the work of the Company’s Management Board”, PKP Cargo explained.

Coal decision was the beginning of the end

The current financial situation for PKP Cargo is a consequence of years of mismanagement. “The company is worth almost 5 times less than on the day of its stock exchange debut just over 10 years ago”, the company’s Acting President Marcin Wojewódka underlined. The main bone of contention is the decision made by the Polish government to prioritise coal transport via rail in 2022.

The company claims that the implementation of this policy and the consequent abandonment of other contracts took a massive hit to the company’s finances. Last week, PKP Cargo launched a legal action against its former management and the country’s former Prime Minister Mateusz Morawiecki.

What about the workers?

As is often the case, the most penalised in these types of situations are the workers. PKP Cargo employs more than 20,000 people, and drastic outcomes cannot yet be excluded. In May, the company decided to move up to a third of its workforce to an inactive status for 12 months. These people will thus not be allowed to work and will see their salaries cut by 40 per cent until May 2025.

Up to 300 PKP Cargo employees, moreover, have been relocated to Polish regional passenger operator Polregio. PKP Intercity, the largest Polish rail passenger company, will also absorb 400 additional people from PKP Cargo. “We are planning more such programs to support the employment of our employees”, Wojewódka added. The workers who will move to PKP Intercity will mostly take care of rolling stock maintenance.

Also read:

• PKP Cargo concedes to unions as it looks to “Make Cargo Great Again”
• PKP Cargo bets its future on frail foundations
• Rail freight in Poland keeps decreasing