Employees, customers of Holland Car to sue company


Employees of Holland Car, the first car assembly plant in the country, are considering making legal claims for their compensation from the company.
The company that has officially announced it has filed an application to the courts declaring bankruptcy a week ago, has already paid half a month’s salary to its employees in the last week.
A week ago the company wrote a letter to its staff saying it was bankrupt but that the company will settle payments that have to be paid by the company.
But employees said that the letter was not signed by any specific person.
According members of the staff, Holland Car has only settled their salaries for two weeks. “But the employees are considering suing the company to get compensation and other benefits,” sources at the company explained. 
A week ago Tadesse Tessema (Eng), General Manager and founder of the plant, said that his company became unable to continue assembling vehicles because of lack of finances. “After we filed for bankruptcy nobody is working; the company is in bankruptcy proceedings so it has paid until the day of the announcement of bankruptcy, because all the employees were on duty until that day,” Tadesse said in his email response to Capital on Friday night.
The car assembly plant which was in business for the last seven years was popular, with its Abay, Tekeze and Awash automobile brands. Clients that spoke to Capital said those clients that did not get their vehicles, and others that gave additional money as a loan to the company for the purpose of settling customs duties to get their cars are also in the process of finding legal recourse.  One of the clients who got her automobile three weeks ago after it was delayed for 33 months said that she has given an additional 171,000 birr as a loan to the company to settle customs duties. She said that based on the deal the company will pay the money in April 2013. “If the company declared bankruptcy how I can get my money,” she said. “Due to that I and other clients who gave loans and some who did not even get their automobile are in the process of going the legal route,” she explained.     
Tadesse said that the company is looking for other means to settle its loan and deliver the automobiles to its clients that are still waiting.
In a phone interview Tadesse told journalists that he was trying to get financial support from local and overseas financiers and parts suppliers for the company, but failed to get any. He told Capital that he met with officials at the Ministries of Trade and Industry including the Minister of Industry and his advisors and head of metal industry department at the ministry, but he said that the officials could not save the plant.
He said that the ministry office had written a letter to the state owned Development Bank of Ethiopia (DBE) to find ways of financing the car assembly, but DBE declined the loan request, stating that it does not have finances for this kind of investment.
On the other hand the marketing and customers office that includes showrooms of the company located at TK Building in Bole was shut down by the building administration.
Tadesse said that TK is shut down because there are no employees in the building. “And the outstanding rent will be calculated before we take materials out of the building,” he explained in his email response.
The company stated that the transportation cost increment, spare parts price hikes from the original supplier, delays to access of foreign currency for letters of credit (LC) from local banks, and customs charge increases are some of the major factors that have led Holland Car to default on its loan payments and deliveries. But the devaluation has stated the major problem for the failure.
The company owner also blamed the Addis Ababa City Administration Transport Bureau for its bankruptcy. The city changed an original deal with the company to assemble buses for the city. According to the head, in the last fiscal year the company has lost 20 million birr.       
According to sources, the owner has been out of the country for the last few months. He said that he is in the Netherlands to look into other options to revive the assembly. 
A week ago Zemen Bank, which facilitated loans for Holland Car, has disclosed that it see conditions to settle the bank loan.
“At this point, Zemen Bank would like to inform Holland Car customers, employees, and the public that the Bank is working on a solution that will try to address the concerns of the key stakeholders involved in this case,” the statement indicated. 
Holland Car was established in 2005 through a joint venture (JV) between Tadesse Tessema (Eng) and Trento Engineering, a Dutch company, to supply assembled vehicles for local and export markets, with an initial capital sum of 11 million Br equally contributed by both shareholders. Holland Car assembles vehicles at its factory located in Mojo Town, Oromia Regional State, 70kms south of Addis Ababa. The company has 250 workers.