Related videosPetit-Couronne: les Petroplus ne veulent pas mourir en silence
Closing of sale of the Cressier refinery and related Swiss marketing and logistics assets. Approval by the debt restructuring judges of the sale of the Cressier refinery and related Swiss marketing and logistics assets. Definitive debt restructuring moratorium for a term of six months granted for Petroplus Tankstorage AG. Report on the financial status of Petroplus Tankstorage AG under provisional debt restructuring moratorium is submitted to the competent judge. Reports on the financial status of Petroplus Holdings AG and Petroplus Marketing AG, both under provisional debt restructuring moratorium, are submitted to the competent judge.
Debt restructuring agreement for Petroplus Marketing AG confirmed by judge. Sale of Cressier refinery and related Swiss marketing and logistics assets. Bankruptcy occurs when a business or country is unable to meet its financial obligations to its creditors.
According to reports in the media, this is the case with both Greece and Petroplus. Financial management is the main responsibility of management so simply putting two and two together means that management is responsible for the problems facing both Greece and Petroplus and for not mitigating the situation or even managing it better than they have. I know its not an easy job running an oil refinery or country and its easy for me to sit in the comfort of my home drawing these conclusions but executive remuneration more than makes up for the heat executives face whilst carrying out their duties.
If Greece is on the verge of bankruptcy because it cannot service its debts and reports show that tax evasion is rampant and the country is still spending more than it makes in Gross Domestic Products then who is to blame?
Management the government has lost a grip on the country's finances. The blame is theirs to bear. Economists admit that Greece's problems are unprecedented so no one knows what will happen.
So let's watch as it unveils whilst hoping that it doesn't impact the UK any more than it has already. Every business is a step away from bankruptcy if it's operating by the help of a huge line of credit.
Of course management would never admit it, but it only takes a fallout with creditors or damage to trust levels for credit to be frozen. The oil business is very capital intensive so operationally they would need a lot for capital investment for equipment and for the general upkeep of the refinery.
The reason why they need access to large sums as working capital hence the line of credit. Secondly, although there is a high demand for oil, oil is a commodity so the refinery making the cheapest oil gets the customers.
There really is no differentiation between the oil Petroplus produces and that of its competitors so it is very easy for it to face financial difficulties if sales contracts are not renewed.
So high fixed capital investment, high working capital and high loans puts this seemingly recession proof business at high risk when the bankers are in trouble. It's quite a common mistake for businesses with high margins to assume astronomical amounts of debts in the belief that they could make repayments from profits.