The vote affects the major creditor, Latvian commercial bank Unibanka, which can still recoup the money owed them from Tolaram Fibres.
Following the decision for a motion of bankruptcy, the creditors also agreed on a vote of no confidence against Tolaram Fibres financial administrator Lidija Skreija. The Latvian Supreme Court on Feb. 16, ruled on the decision to oust Skreija and to appoint a new financial administrator to handle Tolaram Fibres' financial situation.
Stalkers, the present lessee of the Tolaram Fibres plant in Daugavpils, and the French company Rhodia, which wants to take over the lease of the plant, must now wait for the new Tolaram Fibres administrator to be appointed to see which company gets to run the plant. Stalkers and Rhodia have to also put in bids to re-purchase from Unibanka the factory equipment which the company Tolaram Fibres used as collateral in their loan with the bank.
"Tolaram Fibres signed a credit note with our bank placing the Daugavpils plant's non-liquid assets as a guarantee on their loan," said Unibanka's press secretary Haralds Burkovskis. "Unibanka's total outstanding debt stands at 5.6 million lats ($94.9 million). With Unibanka being the major creditor and the pledge Tolaram Fibres made in the credit contract of the whole plant being collateral, it will be up to either Stalkers or Rhodia to put in the most attractive bid to Unibanka to recoup our loan. At the end of the day it will be the bank who will decide the future of the plant."
The Latvian Ministry of Finance was also present at the creditors' meeting in Daugavpils. The ministry agreed on the decision of bankruptcy and voted in favor of Skreija being removed from office as financial administrator of Tolaram Fibres. Baiba Melnace, Ministry of Finance spokeswoman, said that the new administrator will decide who will take over the running of the Tolaram Fibres plant and with Unibanka being the insolvent Tolaram Fibres main creditor, the bank can call in their credit and sell the plant's non-liquid assets.
"The creditor [Unibanka], will decide how best to recover their bad debt. The Ministry of Finance wants to achieve the best result in having the factory run full-time and getting owed money back to Tolaram Fibres creditors," said Melnace, "On the matter of Skreija, a small creditor of Tolaram Fibres which I can not name, initiated the call of no confidence, and when it went to a vote, a majority backed the motion. The ministry also voted against Skreija on the motion of no confidence."
The Daugavpils City Council and Stalkers did not back the motion of no confidence. Rikards Traba, Daugavpils City Council director, wanted Skreija to stay in her position of Tolaram Fibres administrator.
"Skreija kept the plant operating with the lessee Stalkers. She ensured the workers at the plant received their wages and kept the staff employed at the plant. On her actual work dealing with the company's financial situation, I cannot comment," said Traba.
The Daugavpils company Stalkers was also pleased at having Skreija being Tolaram Fibres financial administrator. The company's press secretary, Ugis Spandeks, thinks that the case against Skreija is possibly not over.
"Skreija might be able to appeal her decision or even go for candidacy for the position of Tolaram Fibres administrator again. Really the losers of the whole situation will be the workers at the plant if the new company administrator does not renew Stalkers lease," said Spandegs. "What does not help the whole situation is that major creditors at Unibanka are flexing their muscles and changing the rules. Unibanka has shown improper behavior by changing the price of the equipment they hold as collateral."
Skreija herself is very displeased with the situation and sees that Latvia needs specific courts to rule on decisions and not have rulings by general courts.
"I really do not want to comment too much, but I think that Latvia needs to have specific court systems in place to deal with individual situations, be it business or family courts," Skreija said. "There are no specific courts operating here and we need court systems that are in place in the West."
The Supreme Court ruled that Skreija was holding down four positions of company administrator, when Latvian law permits only an administrator to occupy only three positions. Skreija was dismissed because of this breech of the law, and the Latgales District Council will choose who will become the next Tolaram Fibres financial administrator.
Rhodia and its Baltic states delegate, Jeane Claude Lordereau, are very pleased with the High Court's decision and hope that a new administrator will handle the situation of the insolvent Tolaram Fibres in a better manner.
"After our company's talks with the Latvian Ministry of Finance and the state secretary and the ruling by creditors that Tolaram Fibres is bankrupt, we are positive that Rhodia can go deeper in securing the Teijun unit for our production of fibres," said Lordereau. "Now that Skreija has been dismissed as Tolaram Fibres administrator, we just have to wait for a new administrator to be appointed."
"Rhodia has also placed a request with Unibanka that we would like to do a detailed audit of the plant's equipment, as Unibanka has the equipment as a pledge with Tolaram Fibres," Lordereau said.
"We need to know how much the equipment is actually worth, before we put forward an offer to Unibanka."