Also ready to participate in the capital increase of Polzela, which recorded a loss of EUR 3.9m and has been in court-mandated debt restructuring since March 2014, is the Bank Asset Management Company (BAMC) or bad bank.

BAMC is ready to convert EUR 0.5bn or 22% of the entire claims, however only on condition that all other creditor banks, many of which are state-owned, decide to participate, the government said after the session.

In case this does not happen, receivership will follow at Polzela, with BAMC explaining its policy does not allow it to convert more than the mentioned sum.

The government, which approved EUR 1m in state aid to Polzela in March last year, is convinced that despite the difficult situation on the market, Polzela has the key strategic advantage of being a strong brand.

This view was welcomed today in a press release by Polzela CEO Karmen Dvorjak who said "there is collective conviction among the shareholders that Polzela deserves a future".

The company, whose workforce has been reduced to 250 from 1,400 in its heyday, was reported last year owing almost EUR 10m to creditors.