The business partners of a Latvian subsidiary of Norwegian logistics giant Tschudi Logistics Holding AS recently went through an experience that they could hardly have expected at the beginning of the chaotic 1990s. The Latvian-based company Tschudi Logistics SIA suddenly changed its name and declared insolvency. Bankruptcy soon followed, and the company’s decade-long business partners were left unable to collect hundreds of euros of unpaid debt.
Managed by several generations of the same family since 1883, Tschudi Group is known in Norway as a leading shipping and logistics group and the parent company of the international conglomerate Tschudi Logistics Holding AS. The conglomerate companies operate in the Baltic states, and local logistics companies gladly went into business with them. “We had been partners for over 10 years and I never even suspected that one day we might not get paid for our services because this was a Scandinavian company that was known for its strong values, a company that invested millions in new businesses and acquired metal companies. At one point, when the payments fell behind by several months, we were assured that everything would be all right. But how wrong we were to believe it,” shared Dainius Laurinonis, deputy financial director of the Lithuanian logistics company Transporto Vystymo Grupė.
Today, he is trying to reclaim the 80,000 euros his company is owed, but so far his efforts have been unsuccessful.
A change of name and bankruptcy
Last fall, things in Latvia took a strange turn: some of the business partners accidentally learned that the company named had been changed to DJ Logistics SIA. Management at the Estonian Tschudi Logistics responded to enquiries about the change by issuing assurances that this was just a formality and that they were looking into the situation. Pressed by the endless questions from their business colleagues, the representatives of the Estonian sister company informed the latter that DJ Logistics SIA had become insolvent and, later, that it had filed for bankruptcy. Today, with the help of a bankruptcy administrator, creditors are trying to get back over 250,000 euros from the no longer operational company. Waiting in line for their share are Latvian logistics companies Translats and Bolivar Logistic.
Norway keeps quiet
Creditors thought they would find common ground with the parent company Tschudi Logistics Holding AS, but for a long time the Norwegians would not answer their letters or calls. It was not until Transporto Vystymo Grupė enlisted the help of Lithuanian diplomats that they succeeded in setting up a meeting with the company’s acting director, who explained that all decisions regarding the fate of the Latvian company would be made by its Estonian counterpart and that that is who the partners should be communicating with. “At the time we felt reassured that everything could be set right,” recalled Laurinonis of the hopeful meeting.
The Lithuanians realised that they had probably been fooled by the Norwegians once again when Tschudi Logistics subsidiaries in Estonia and Finland stepped to the front of the line of creditors trying to reclaim the meagre funds that remained in the hands of the bankrupt Latvian enterprise. Apparently, the related Tschudi companies had been providing management and accounting services to the Latvian company and were to be compensated a sizeable sum of 100,000 euros for management services alone. This time, this convenient method of transferring company funds to the accounts of its sister companies failed to convince Arigita Jaunsleinė, the bankruptcy administrator on the case, who then refused to include the related Tschudi companies in the list of creditors.
“This move simply overwhelmed us because the intention here was to prevent any possibility for us to recover what we were owed from what little was left of the company. At the same time, it might have revealed a rather controversial mechanism for pulling money out of the company,” Laurinonis said of the surprising actions of the Norwegian giant.
To this day, he cannot understand how the Latvian company could have been bled dry under a different name and suddenly removed from its business transactions, leaving its creditors with enormous debts – all without any repercussions. The attempt to dredge the remaining funds from the subsidiary company looks bad as the group declares that “all aspects of [its] business are conducted with honesty and integrity”.
The Norwegian giant’s irreverent attitude towards the Baltic states clashes with the declarations of a transparent and responsible business that can be found on the Tschudi Group’s website and in its publications. Lithuania’s businessmen assert that an environment of trust is essential in the logistics business, otherwise the entire chain of supply crumbles and an unreliable freight forwarder or client can bring down the entire market, let alone the fact that few companies would wish to do business with such a partner in the first place.
In the end, market participants cannot be sure whether the group will refrain from the use of such methods with its other companies and whether the values it declares have anything to do with reality.