Amid a financial crisis at the company, Polish national rail freight operator PKP Cargo found itself forced to lay off thousands of its employees to make ends meet. However, the company now says that even this austerity measure is too expensive: it does not have the money to make severance payments.
“PKP Cargo in restructuring currently cannot afford to repay all of the liabilities to employees, therefore it is necessary to spread the [severance] payments and postpone them”, the rail freight operator says. “The company’s management confirms that all persons who will not receive severance pay, compensation, awards or equivalents on time are fully entitled to them, and these benefits will be paid at the first possible date.”
The company will also be submitting an application for a loan to cover the severance payments, according to a board member at PKP Cargo.
Reprehensible errors
Earlier this year, PKP Cargo’s new management decided to enter into restructuring proceedings. The board talks about a “disastrous condition” at the company, which has forced it to conduct mass layoffs, but it has also changed its management structure, reducing employee representation significantly. The rail operator cites “the reprehensible errors committed by the management boards of PKP Cargo in 2022-2023, which in the long term led to an extremely difficult liquidity situation, as well as politically motivated decisions of the government of Prime Minister Morawiecki” as the underlying reasons for the company’s difficult financial position.
PKP Cargo has thus made some impactful decisions, but restructuring does not seem to be going swimmingly. The company missed the deadline for the submission of its restructuring plan to a Polish court. It was due on 25 October, but PKP Cargo says the plan will only be ready by 2025.
“At the moment, intensive work is underway, but we must clearly state that, according to the knowledge of the management board, on October 25, when the three-month period specified by the court for presenting the restructuring plan expires, it will not be ready and submitted to the court by the restructuring administrator”, Marcin Wojewódka, acting president of PKP Cargo told Polish media.