Financial Services, Latvia, Legislation, Markets and Companies, Metals Market

With the opening of the legal protection proceeding, the court suspended the insolvency proceeding started against KVV Liepajas Metalurgs based on a claim filed by G4S Latvia security company.

KVV Liepajas Metalurgs is to produce to the court by August 30 a plan of legal protection measures aimed at rehabilitation of the company and approved by the creditors.

As reported, the Latvian government on May 17 and May 24 reviewed the report prepared by the Latvian Privatization Agency (LPA) and FeLM, a company established by the LPA to which the State Treasury will assign its claim against KVV Liepajas Metalurgs, in cooperation with the economics and finance ministries. It was concluded that the debt restructuring proposals by KVV Group, the Ukrainian owners of KVV Liepajas Metalurgs, are inacceptable and other solutions have to be found for revival of the steel plant.

The proposals by KVV Group include significant participation of the Latvian state in the metallurgical company without handing over control over the company, tax discounts and other measures that might be interpreted as unlawful state aid.

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.