The Icelandic supermarket chain in the Czech Republic has succumbed to Brexit. He filed for insolvency

ICL Czech, which operates the stores of the British chain Iceland in the Czech Republic, has filed for insolvency. Spokesman Petr Langmaier declined to comment on a direct inquiry to Aktuálně.cz. According to the insolvency proposal, the reason is a coronavirus pandemic, which also affected food sales and Brexit, which, among other things, significantly increased the cost of transporting goods to the Czech Republic.

According to the insolvency register, Iceland has a total of 135 creditors in the Czech Republic with maturing cash receivables exceeding CZK 38 million. It has liabilities of about 36 million crowns, for example, to ČSOB, the Czech Social Security Administration or the Tax Office for the Capital City of Prague.

“The bankruptcy of the petitioner is caused by the negative state of the economy as a result of the covid-19 pandemic, which also affected the food retail sector,” the debtor’s proposal to initiate insolvency proceedings is stated.

According to the proposal, Brexit had a significantly negative effect on the results, as a result of which the company’s increased costs for transport and customs clearance of goods. Supermarkets had to become more expensive, and food deliveries were delayed. British food was a key part of Iceland’s range.

“Last but not least, it is necessary to mention the huge increase in the price of electricity, which has a significant impact on the operation of energy-intensive stores of the petitioner specializing in (selling) frozen foods,” the document goes on to say.

Iceland has 82 employees in the Czech Republic and 19 people by agreement. 6 of the 11 stores were shut down, with the remaining stores “no longer able to generate enough revenue for further operations,” according to the insolvency petition.

The chain began closing stores in the Czech Republic in April this year. At the same time, it closed its e-shop. The e-commerce store launched the chain at the end of 2020, but according to the proposal, it was not able to compensate for the drop in store sales.

“Yes, several stores have been closed and the e-shop has closed,” Langmaier confirmed for the online daily Aktuálně.cz in April. “We came to such a decision after a difficult Brexit period and now there are some changes in business strategy,” he added.