Ruined Bulgarian Steel Mill Workers to Receive Overdue Pay

Industry | August 30, 2011, Tuesday // 08:37|  views

Workers from Bulgaria's Kremikovtzi steel mill will rally in the streets of Sofia in November 2009 in the eve of the looming shutdown. Photo by BGNES

Workers from the now-closed steel mill Kremikovtzi, near the Bulgarian capital Sofia, have renewed hopes they can receive their overdue salaries and wages through the Court.

The Sofia City Court has approved the invoice for distributing the mill's debt to creditors, a check of the Trade Registry, conducted by the Bulgarian Standart (Standard) daily, revealed.

The decision can be appealed with the Supreme Court of Appeals within 7 days, after it had been published while each appeal must be listed in the Trade Registry.

If there is no appeal – overdue salaries in the amount of BGN 60 M must be paid to the steel workers in the very near future.

Bulgaria sold in April the production assets of bankrupt Kremikovtzi steel mill in a fourth auction to a newly established local company, owned by 26-year-old Lachezar Varnadzhiev.

The deal was signed just a month after "Eltrade company" was established on March 8, 2011 with a capital of mere BGN 20 000, a check in the Trade Registry showed, triggering suspicions who stays behind it. It is Varnadzhiev's only company and it is supposed to be a black and colored metal dealer.

Bulgaria's privately-owned First Investment Bank (FIBank) said it had provided all the funding for Kremikovtzi steel mill, amounting to nearly BGN 320 M.

Just before that the bank issued a EUR 20 M bond, which allowed it to boost its credit portfolio by more than BGN 320 M, which is exactly the price of Kremikovtzi sale deal.

The money from the sale must be used to pay some of the staggering BGN 2 B in debt to all creditors while the workers are among the first in line to receive money.

It was reported at the end of July that an offshore company, registered on the British Virgin Islands, has acquired the buyer of Bulgaria's biggest steel mill amid many question marks surrounding the deal.

"Bessian Management Limited" bought "Eltrade company", owned by Varnadzhiev for BGN 20 000, a check in the Trade Registry showed.

"Bessian Management Limited" is in its turn controlled by another offshore company – "Bun Sekretarial Limited", based in Cyprus.

The first two auctions of Kremikovtzi failed to attract any bidders last year. The price started at BGN 565 517 510, which according to trade unions and analysts is far below the market price.

The third tender for the mill's production capacities was held in February 2011, but fell though after the sole prospective bidder failed to submit a deposit.

The smelter shut down some of its furnaces in 2009 due to lack of raw materials after Ukrainian tycoon Konstyantin Zhevago canceled a deal with the plant.

It was previously owned by Pramod Mittal, the younger brother of ArcelorMittal Chief Executive Officer Lakshmi Mittal.

The mill was placed in receivership in 2008 and following failed attempts to sell it to ArcelorMittal and Konstantin Zhevago, it was declared bankrupt.

The sprawling communist-era behemoth near Sofia was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with dire economic conditions, and multiple controversies about mismanagement and financial draining. In a high profile case, Alexander Tomov, former CEO of Kremikovtzi and Bulgarian football great CSKA, faced trial.

At the end of January this year Tomov was sentenced to nine years in jail by a Sofia city court for selling off plots of land owned by Kremikovtzi at well below the market price.

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Tags: creditors, debts, debt, salaries, workers, trade registry, Supreme Court of Appeals, Sofia City Court, Krassimir Stefanov, FIBank, First Investment Bank, Bulgaria, mill, steel, Krasen Stanchev, KC2, Konstantin Zhevago, pramod mittal, Alexander Tomov, scrap, nadin - n, eltrade company, lachezar varnadzhiev, steel giant, Kremikovtzi, Nadin Metals Trade


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