The Economy and Energy Ministry welcomed the ruling of the Sofia City Court to declare the Kremikovtzi steel mill insolvent, a ministry media statement said on August 6 2008.
The Ministry of Economy and Energy believed that the court decision would enable Kremikovtzi in the short term to restore its business in full, be reserved production and jobs, and to be generated sufficient financial resources to be directed to environmental measures and the mill's viability, with a view to obtaining a comprehensive permit, Focus news agency quoted a government statement as saying. These are the necessary preconditions for successful subsequent resale of the establishment of a strategic investor.
"We are happy with the court's decision to declare Kremikovtzi insolvent," Lyudmil Pavlov, chairman of the trade union of Metallurgists with the Confederation of Labor Podkrepa, was quoted as saying by Focus news agency.
Only days before, when the insolvency was filed with the Sofia City Court, Podkrepa had said that sending Kremikovtzi into liquidation would cause “a social explosion”.
Earlier on August 6, the Sofia City Court had ruled that the ailing steel mill was insolvent, opening the way for its sale.
A court media statement said the court had opened a bankruptcy case and appointed a temporary receiver for the mill.
Reuters said a Kremikovtzi spokeswoman declined comment before the mill's management would have seen the court decision.
As The Sofia Echo reported earlier, the solvency case had been filed on July 30. One of the plaintiffs in the case was RUA Invest Inc, registered on the Virgin Islands and which, according to Bulgarian news agency BTA, was controlled by Konstantyn Zhevago, who is one of the candidates to buy the steel plant.
The other candidate is the world's leading steel manufacturer ArcelorMittal controlled by Indian tycoon Lakshmi Mittal.
Both have said they would prefer the mill to go through insolvency before a sale is completed, Reuters said.
Nikolai Stoinov, a lawyer for RUA Invest Trade said on July 29 that the mills has a total debt of over 2 billion leva.
Global Steel Holding Limited, a subsidiary of Indian steel maker ISPA Industries, owns 71 per cent of Kremikovtzi. Pramod Mittal, brother of Lakshmi Mittal, who is chief executive of ArcelorMittal, chairs ISPA Industries. The state owns 25.3 per cent of the steel mill with private individuals holding the remainder.
The state has vowed that it would keep the mill operational.
On August 4, Economy and Energy Minister Petar Dimitrov told Bulgarian National Television that the government, as the mill's biggest creditor, would have a key say in the future owner of the mill.
After the court ruling in August 6, Vasil Yanachkov, chair of the trade union of Metallurgists with the Confederation of Independent Trade Unions in Bulgaria was quoted by Focus news agency as saying "I think the court decision to declare the Kremikovtzi steel mill insolvent is a good one."
"From now on the road is open to all who want to work with Kremikovtzi, not only for Konstantyn Zhevago because other people may come," Pavlov said.
In its ruling, the court set the date for the insolvency at December 25 2005.
Konstantin Trenchev, chairman of the Labour union Podkropa, was quoted by Focus news agency as saying that "the date is important because some deals dating to the beginning of the insolvency proceedings could be contested."
"Now there are two options, either we will save the plant, or it will be cut for scrap," Reuters quoted Victor Demanuk, head of Vorskla Steel, the Bulgarian unit of Zhevago's operations, as saying.
Kremikovtzi employs abour 8 000 people and suppprts the livelihoods of another 90 000 indirectly.
