OREANDA-NEWS. September 11, 2013. SORAINEN Latvia is acting for Stemcor UK Limited, one of the world’s largest independent steel traders and one of the biggest creditors of Liepajas Metalurgs, the largest industrial enterprise in Latvia which is currently undergoing a legal protection process due to serious financial difficulties.

Liepajas Metalurgs’ metallurgical plant sold scrap metal to SORAINEN’s client, which was kept in the port of Liepaja and could be removed only upon instructions from the client’s banks. As a result of the failure of Liepajas Metalurgs and its daughter company Liepajas Osta LM to honour their obligations in keeping the scrap metal stock within the port’s territory, SORAINEN has filed a USD 18 million (approx EUR 13.45 million) claim on behalf of its client against Liepajas Metalurgs and its daughter company Liepajas Osta LM.

The other part of the case relates to representing the client in the legal protection process of Liepajas Metalurgs initiated by the court, where SORAINEN’s client, together with other creditors (creditor club) including the State Treasury, is seeking a viable solution for Liepajas Metalurgs’ critical situation. Such a solution is important for the client because, in addition to the claim referred to above, Liepajas Metalurgs has a large debt to SORAINEN’s client arising out of non-fulfilled steel rebar and billet production which was pre-financed by the client.

This situation of Liepajas Metalurgs has been headline news in Latvia since spring, when the financially troubled company ran into difficulties due to insufficient current assets, and it is now on the verge of insolvency. As the company was not able to make its loan repayment to the Italian bank UniCredit, the State Treasury who guaranteed the loan made the payment for the company, thus also becoming one of its biggest creditors. Liepajas Metalurgs is currently under legal protection established by the court and has recently submitted its legal protection plan to the court. In addition Liepajas Metalurgs hopes to attract investors, and is also seeking a government bailout. Furthermore, its shareholders are in disagreement, and they have started several court actions. Criminal investigations have also been started by the police due to allegations of fraud made by some of the shareholders.

Against this background SORAINEN has been representing the client in litigation against Liepajas Metalurgs and Liepajas Osta LM, and in the legal protection process of Liepajas Metalurgs as one of its biggest creditors.

Partner Agris Repss and senior associate Raivo Raudzeps are working on this case.