– What does that lawyer get his high salary for?. Finding solutions is probably very slow. That’s what the mayor of Hjørring Municipality Søren Smalbro (V) says.
Like North Jutland, he is eager to find out what is going on regarding the reconstruction of the debt-plagued Hirtshals District Heating, which has been in limbo since the beginning of the year.
New deadlines have apparently been given, so that the work to revive the company and find a solution to a debt of DKK 16 million can now continue well into the new year.
In the meantime, the company’s 2,700 consumers, Hjørring Municipality and the public are kept in the dark, and soon Hjørring Municipality will have to dig into the coffers for the third time this year and find half a million kroner for installment payments on debt in the company.
Optimism, but silence
However, lawyer Henrik Poulsen, who has been appointed as reconstructor, is completely calm about the process.
– I cannot say what is being worked on specifically, but I am optimistic. It is actually a well-run company, so we should probably succeed in finding a solution so that we avoid bankruptcy, says Henrik Poulsen to Nordjyske.
What is your comment on the mayor’s criticism of the slow process?
– I have no comment on that, says Henrik Poulsen from the law firm Bruun og Hjejle.
Attorney Henrik Poulsen cannot reveal details of the rescue plan being worked on, but he states that he is optimistic Source: Bruun and HJejle
The problem for Hirtshals Fjernvarme is a debt of DKK 16 million, which stems from the company’s share in a failed speculation in electricity prices in the bankrupt company Dansk Kraftvarme Kapatitz.
The future is still uncertain for Hirtshals Fjernvarme Archive photo: Henrik Bo
Along with a number of other district heating companies, it was speculated that the spot price would remain stable, and it went well until the energy crisis in 2022, when energy prices, as you know, skyrocketed.
Earlier this year, the Danish Supply Agency rejected a solution where they went back and reopened the accounts for 2022, where the company could then be divided into an electricity part and a heating part.
Thus, a separate solution could be found for the electricity part without running afoul of the Heating Supply Act, which is very restrictive.
But that solution was rejected, and now there is only the possibility that a buyer is found, or that capital is added in some other way to pay the 16 million.
Hirtshals Fjernvarme is not allowed to realize values itself – for example the sale of buildings or CO2 quotas in order to pay the debt. It is against the Heating Supply Act.
Initially, the consumer-owned Hirtshals Fjernvarme tried to include the debt of DKK 16 million in the consumers’ heating prices, but this was found to be illegal by the Danish Supply Agency.
The municipality is in debt
In addition to the debt to creditors of DKK 16 million, the municipality is currently hanging on to another residual debt of DKK 4.8 million, for which the municipality provided a guarantee in 2019. It has so far cost Hjørring Municipality and thus the taxpayers one million kroner this year.
Mayor Søren Smalbro states that the 2,700 heat consumers in Hirtshals should not fear the radiators becoming cold, even if it were to end in bankruptcy.
– I can’t imagine that happening at all, says Søren Smalbro.
If it ends in bankruptcy, however, it will be the first time in Denmark that a district heating company goes bankrupt.
The bankruptcy court has provisionally set a new deadline for a solution to 3 January, but according to lawyer Henrik Poulsen, it can be extended another two months.
2024-11-14 04:44:00
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How can the municipality ensure effective communication and transparency during the restructuring process to address stakeholder concerns?
The aim of alleviating some of the financial burden on Hirtshals District Heating. This rejection has contributed to the ongoing uncertainty and anxiety for both consumers and municipal stakeholders.
The legal complexities surrounding the restructuring process have been compounded by the significant debt incurred from the failed investment, leaving many questioning the efficacy and speed of the current reconstruction efforts. Mayor Søren Smalbro’s impatience reflects the growing concerns amongst the community about the potential for bankruptcy and the impact it may have on local residents dependent on the district heating services.
In seeking a resolution to this crisis, the focus remains on understanding the company’s operational integrity, as highlighted by attorney Henrik Poulsen’s remarks about the potential for a successful turnaround. His cautious optimism, however, has not quelled the frustration within the municipality, particularly as they face the prospect of additional financial contributions to stabilize the situation.
The interplay between legal processes and municipal responsibilities is complex, and while Poulsen does not divulge specifics about the ongoing negotiations, it is clear that balancing the interests of consumers, the municipality, and the company itself will be essential in forging a sustainable solution. The coming months appear critical as stakeholders await more transparency regarding the steps being taken to address the company’s substantial financial woes and to restore confidence in Hirtshals District Heating.