Creditors and Jurmala Town Council have thrown doubt over the legitimacy of an auction in which Latvia's largest fuel wholesaler, Kurzemes Degviela, bought the bankrupt Juris Licis fish processing plant.
Kurzemes Degviela, which boasted revenues of 127 million lats (211 million euros) last year, has said it wants to raze the empty plant buildings and build a multi-million dollar tourism center and yacht harbor.
According to company president Argods Lusins, the 20 hectares of land on which the old fish plant stands was bought for 1.6 million lats.
"Since last year the company has been discussing expansion into the tourism sector, and acquisition of Juras Licis is the first step in this direction," Lusins told Baltic News Service.
"Situated at the mouth of the River Lielupe, the new tourism center will attract tourists and create jobs," he added.
Included in the company's plans are a yachting harbor, repair garage, winter storage for sailing equipment, as well as a hotel and other tourist-related facilities.
But the plans have run into opposition. The State Revenue Service, the major creditor of bankrupt Rigas Licis, has already appealed to auction results in court.
Dita Klavina, head of the public relation department for the service, said that the sale price for the Juras Licis property - 1.6 million lats, or the minimum starting price - was not enough to satisfy creditors' demands.
"On March 21, one day after Kurzemes Degviela took possession of Rigas Licis, the State Revenue Service brought a suit to the Riga Regional Court demanding the results of an auction be dismissed," said Klavina.
Kurzemes Degviela officials are standing firm. Ilmars Krums, administrator of Kurzemes Degviela, said he believes the company paid "satisfactory sum."
"The auction only gives the rights to manage the old fish processing plant, and about 90 per cent of the buildings there must be pulled down," the daily Neatkariga Rita Avize cited Krums.
The actual price of the bankrupt Rigas Licis' property was estimated at 4 million lats.
Moreover, opponents of the deal have cast doubt over both the methodology of the auction and the fact that Kurzemes Degviela was the only participant.
Argods Lusins could not be reached for comment.
Krums, however, rejected the arguments that the company was allowed to become the only auction participant. He said that companies from China, the United States and Russia had expressed interest in Juras Licis, but upon learning that the harbor status of the Rigas Licis territory could only be changed by decision of the government declined to participate.
Igors Drejs, a deputy on Jurmala's Town Council, said that he doesn't see any violations in the auction.
On the other hand, he admitted that many council deputies have predicted that private houses will sprout up instead of planned tourism and yachting center.
"The idea of transforming the harbor into a luxury residential area is viable and financially more advantageous," said Drejs.
In such a scenario, according to Drejs, the first step would be to change the status of the harbor and being selling plots for a mint.
Lusins rejected the notion that Kurzemes Degviela will change its business plan. "The object needs significant investments, and we are ready for serious work in realizing the long-term investments," Lusins told Baltic News Service.
The head of Jurmala Tourism and Public Relation Department, Armands Muiznieks, said that Jurmala Town Council is willing to support the concept of a tourism center on the territory of the former fish plant.
"The council has determined that tourism promotion is the major priority, and we are expecting any tourism-related objects [to be built] there - a hotel, yacht harbor or amusement park," he said.
According to Muiznieks, although there is no reason to doubt that Kurzemes Degviela will invest in its tourism project, the council does not exclude possibility that territory of the old fish processing plant will be turned into an elite residential region.
Muiznieks also admitted that the city council would try to interfere if Kurzemes Degviela changes its plans.
"Developing tourism is the long-term investment which will promote the town in the future. Moreover, it would employ more than 800 people," said Muiznieks.