Steelworks owners plan to sue state over insolvency

KVV Group, owners of a mothballed steelworks in Liepaja, will turn to an international court over insolvency proceedings started against the metallurgical company KVV Liepajas Metalurgs, KVV Group's press secretary Natalya Napadovkaya told the LETA newswire August 15.

KVV Group claims that filing a lawsuit against the state of Latvia with an international court of arbitration is the only way the company can protect its reputation and a claimed investment of over €35 million in KVV Liepajas Metalurgs.

"Manipulation of collateral properties, past debts that were forced upon KVV Group, demanding a financial guarantee of €13 million, unilateral talks with potential investors all suggest that government officials have been doing everything in their power to make the legal owners of KVV Liepajas Metalurgs leave," said KVV Group.

As reported, Liepaja Court on June 30 decided to start a legal protection proceeding in respect of the financially troubled KVV Liepajas Metalurgs metallurgical company, court spokeswoman Velga Luka told LETA.

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 the G4S Latvia security company for unpaid bills.

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 previously 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 unacceptable and other solutions have to be found for revival of the steel plant.

The proposals by KVV Group included 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 mothballed the steel plant afte two years of on-off production ever since they were controversially sold the facility.

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