Baltic States – CIS, Industry, Latvia, Markets and Companies, Metals Market

He said that the next step in the company’s insolvency process would be inventory of its fixed assets and their evaluation. As the Privatization Agency has been doing that earlier, the administrator will ask the Privatization Agency to conduct inventory also this time to save resources. The process might take some two months.

Debitors may submit their claims within one month starting from September 16 when KVV Liepajas Metalurgs was declared insolvent.

Koris also supports the government’s position that the core assets related with manufacturing should be sold as a whole so that the plant’s operations can be renewed.

As reported, Liepaja Court on September 16 approved commencing of insolvency proceedings at metallurgical company KVV Liepajas Metalurgs. Guntars Koris has been appointed insolvency administrator for the company. The insolvency case against KVV Liepajas Metalurgs was opened following a complaint submitted by the joint-stock company G4S Latvia. One more insolvency claim was filed by TKB Lizings. Both cases have been combined into a single civil process, explained Kurpa.

On June 30 Liepaja Court decided to start a legal protection process in respect of KVV Liepajas Metalurgs. However, the company did not present its legal protection plan to the court by the end of August, therefore the legal protection process was closed and review of the insolvency claims resumed.

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 unacceptable 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.

Ukraine's KVV Group is preparing to sue Latvia in the European Commission's Anti-Monopoly and Corruption Prevention Committee, which could lead to Latvia being hit with a penalty of between EUR 150 to 300 mln. KVV Group points out that filing a lawsuit against the state of Latvia with an international court of arbitration is the only way how the company can protect its reputation and an investment of over EUR 35 mln in KVV Liepajas Metalurgs.

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 mln payment to the Latvian state, an installment for purchase of the steel plant.