Riga Sea Lines files for bankruptcy protection

  • 2005-10-26
  • Staff and wire reports
RIGA - Rigas Juras Linijas filed for bankruptcy this week in what company officials said was the "only realistic alternative" given the mounting claims against the company.
An administrator will likely be invited in to oversee interim management, though the company's situation looked increasingly dire. Last week Rigas Pasazieru Terminals (Riga Passenger Terminal) joined the rising chorus of creditors turning to arbitration to demand its money, while employees remained on board the Baltic Kristina to demand back wages.
Valerijs Barjers, head of Riga Passenger Terminal, said that Riga Sea Lines' debt to the terminal amounted to 175,000 lats (249,000 euros). He said the terminal issued a warning to the shipper in the spring, and then again on Sept. 20, but Riga Sea Lines managers responded by saying that their bank accounts had been arrested.

The terminal now joins Parex Bank, which is trying to wrest back a $7.7 million loan from the passenger carrier, and fuel suppliers, who are owed some 700,000 lats. Given the relative small size of the terminal's claim, Barjers is not holding out hope.

"Chances are small," he said, commenting on his chance to see any money. Barjers added that the terminal expected the arbitration court to rule on the confiscation of the shipping company's property as soon as possible.

Riga Sea Lines' woes began after shareholders, including Riga Free Port and the Riga City Council, refused to raise capital after a court had upheld Parex' claim.

The company's accounts were arrested, and the Baltic Kristina was forbidden to set sail on Oct. 15, leaving passengers stranded in line at the terminal. The terminal ordered the ferry to stay docked, and then demanded a repayment of arrears.

On Oct. 19, the Riga Regional Court satisfied the terminal's request to seize RJL movable property, including the Baltic Kristina ferry.

Riga Free Port, which holds a 19.72 percent stake, earlier decided not to inject fresh capital in the shipper since the Riga International Arbitration Court had ruled in favor of Parex Bank. The loan is guaranteed by Riga Port, and port spokesman Karlis Leiskalns told the Baltic News Service that the port's board had instructed management to ensure that the ferry pledged to Parex was transferred to the port.

Meanwhile, about 80 crewmembers of the Baltic Kristina have refused to leave the vessel since they haven't been paid their salaries. Riga Sea Lines Chairman Janis Butnors said that part of the shipper's employees had not been paid salaries since mid-September when the company's accounts were arrested.

He said that the staff must be paid but could not say when.

The crew has even threatened to go on a hunger strike if not paid, RadioSWH reported on Oct. 20.

Council Chairman Vladimirs Makarovs told the press last week that the council had instructed the board to lay off the crew until a final decision on the company's fate was made. Ferry workers are afraid that, if they leave the ship, they will be accused by managers of violating contractual rules and then denied their back wages.