Банкеръ Weekly



The Varna Court of Appeal rejected (as it was expected) in the beginning of the week (on November 26) the rehabilitation plan, proposed by the British consortium Cammell Laird for Varna Shipyard Inc. This decision may mark the end of the 2-year-long court saga of the shipyard, which currently has mostly debts (exceeding BGL160MN) and minimum chances to resume its core activity - ship-building. The lawsuit was returned by the Supreme Court of Cassation, which satisfied the creditors appeal against the rehabilitation plan, proposed by the British. Cammell Laird itself is also in insolvency procedures.Deputy Premier and Minister of Economy Nikolai Vassilev appealed to creditors for common sense, asking them to refrain from further claims.If the unfinished vessels are left one more winter without special measures for their preservation, at least two of them will be completely destroyed by corrosion, the shipyard's Director Ivan Boyadjiev claims. According to him, about USD40,000 - 50,000 will be sufficient for their preservation during the winter. The company has the money, but its spending could be permitted by the principal only, i.e. by the State.If the ruling of the Varna Court of Appeal is not litigated within the legally set term, Varna Shipyard Inc. will be declared insolvent. A demand for inviting a meeting of the shipyard's creditors has been already filed to the Varna Court of Appeal. The meeting, that will be probably held in mid-December, should nominate a valuator and choose a method for evaluating the shipyard's capacities. It should also make one of the key decisions for the future - the shipyard's assets should be sold as an entity. If its assets are sold separately (as individual machines and equipment), ship-building will have to be deleted as a strategic sector from the map of Varna's economy, experts claim.Presently, both the shipyard's trustee in bankruptcy and the company's managerial team believe that nobody would appeal the recent decision regarding the rehabilitation plan. When selling the shipyard's assets the big creditors like the Bulgarian Consolidation Company and Central Cooperative Bank have chances to get the full size of their receivables, and the next on the list would get much more than they would if the British investor had come. The former employees of the shipyard will probably be deprived of their overdue wages, but it's more important for them now that the shipyard starts operations. In that case they could count on receiving wages in the future.Mr. Vassilev has already announced that the bankrupt enterprise is his first priority, at that, as a ship-building company and not as a ship-repairing operation. He said that strategic investors would be sought and that a public tender would be invited for the shipyard's assets. The deal will be widely advertised, also through the most prestigious authority in this sphere - Lloyd's Register in London. A specialized consulting company will present the shipyard on the international market. The Ministry of Economy claims there are ways to include in the clauses of the sale contract provisions for retaining the shipyard's subject of activity.It's another question how many really strategic investors would be willing to come and develop the labour-consuming ship-building in Varna. Their idea might be to acquire the shipyard's capacities for a mere song and afterwards sell them piecemeal. The most optimistic term, in which this question could be answered, is 60 to 80 days, and the most realistic one is four or five months at least.

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