The once major Varteks clothing manufacturing company is reportedly in dire straits after the tax administration and the city have blocked their bank account, state agency Hina said on Friday, without clarifying how much money the company owes.

“Part of the manufacturing has come to a halt because some workers have refused to work until they see how their next wage will be paid,” Hina added. The head of the workers’ council at the company, Bozica Cicek-Mutavdzic, confirmed this to Hina on Friday.

She said they had asked the management to extend the workers’ holiday until Monday, 22 August, when they should return to work. Departments outside of the  manufacturing department are reportedly working. Varteks currently has 850 employees.

Cicek-Mutavdzic said that some of the debts had been settled in the meantime, which is why it is expected that the account would be unblocked.

A letter was sent to the City of Varazdin asking for them to unfreeze the company’s account, offering in exchange payments of 20,000 kuna (€2,666) every day, in order to reduce the debt. Cicek-Mutavdzic did elaborate on the debt owed to the city, but she said that without unblocking the account the company would not be able to pay workers their wages.

However, the problems do not end here, since intensive negotiations are under way between creditors on the distribution of funds that may be received if the plots of land owned by Varteks get sold to the retail chain Kaufland.

“A meeting was held with all the lien creditors yesterday, and although no one wants the company to go bankrupt, no agreement has been reached either,” she said.

She told Hina that she was convinced there was a way out for Varteks, since there is also interest in the purchase of other properties of the company. The company, she explained, still had inactive assets whose sale could significantly improve its financial situation. Hina did not clarify which assets was Cicek-Mutavdzic referring to.

“According to her, Varteks has been recording an increase in retail sales compared with 2019, the year before the coronavirus crisis, which also affected their business. She said that manufacturing capacities are filled up until the end of the year, and that there is interest from international clothing brands to cooperate with the company. However, she warns, unless the problem of unblocking the account and paying the workers is resolved, all of that will be in vain.” Hina said.