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Answering a question about whether the Latvian state intended to file a claim for insolvency of KVV Liepajas Metalurgs, he said the only way for the Latvian state to have the company declared insolvent was to bring against it an insolvency claim for tax debt. But the Latvian State Revenue Service most probably will not file the insolvency claim against the steel plant because it had other methods for collecting tax debts, Loginovs said.

"Under the best of scenarios, KVV Liepajas Metalurgs starts making payments to creditors. Theoretically, existing shareholders might carry out restructuring at the company but I am skeptical about this scenario,” the head of the Privatization Agency said.

He said the Ukrainian shareholders of KVV Liepajas Metalurgs are demanding extra support from the Latvian state from tax discounts to financial aid. ”We would not and in fact may not provide such aid because any [state] aid needs to be approved by the European Commission,” Loginovs said.

He said that the dialogue with the local management of KVV Liepajas Metalurgs was constructive but, in a private company, strategic decisions had to be made by the shareholders but in this case the shareholders of the steel plant would not take the appropriate decisions.

The Latvian government has put the Privatization Agency in charge of negotiations with KVV Liepajas Metalurgs in an effort to find a solution to the situation.

Ukraine's KVV Group announced in late March it had been forced to take a decision on the conservation of KVV Liepajas Metalurgs steel plant because the negative factors hampering the company's operations – the crisis in the global metal industry, the company's debts to secured creditors and the Latvian government's reluctance to provide assistance to the industry – were persisting.

Liepajas Metalurgs metallurgical plant based in the Liepaja port city in south-western Latvia was declared insolvent after it failed to repay a state-guaranteed loan to an Italian bank. The government sold the plant to Ukrainian investors, KVV Group, in late 2014. Liepajas Metalurgs was renamed KVV Liepajas Metalurgs and officially re-opened on March 6, 2015, but soon started having problems again. The company has had difficulties paying its electricity bills and wages to workers. It has also missed the deadline for a EUR 2.7 million payment to the Latvian state, an installment for purchase of the steel plant.