Bankruptcy order against Lithuanian Shipping Company

Rimantas Sinkevičius
DELFI / Tomas Vinickas

“The decision in essence has been made. The Supervisory Board, which also includes independent supervisors, and the company’s Board have ordered LSC to apply to court and ask to initiate bankruptcy proceedings against the company. The deadline of the order ends today. If the company fails to do so, its shareholders will make relevant decisions,” the minister told reporters.

Currently, around 100 seamen of the company’s arrested vessels are stuck in five different seaports abroad. The company owes over EUR 1.5 million to its employees, while its total debt accounts for around EUR 20 million.

The minister said the situation with stuck or impounded vessels is “rather complicated”, although the Ministry of Transport and Communications had agreed with the creditors on USD 650,000 for the return of seafarers, fuel, water, insurance and the money has not been fully spent yet. Information about remaining resources is being gathered from every ship’s crew. Talking about the return of seafarers from the impounded ships, the minister said that at least a minimum number of them have to remain with the ships to ensure their security.

“We will be looking for the best conditions for those who can and want to return to Lithuania, we will finance the cost of their return,” said the minister.

After it was reported that passports from seafarers were being taken away, the minister said such actions were illegal. Because of this embassies and consulates are being consulted. Sinkevičius was unable to say when the seafarers would return to Lithuania as this will depend on legal processes.

President Grybauskaitė criticised the transport and communications minister regarding Lithuanian Shipping Company. According to the president’s chief advisor Daiva Ulbinaitė, in the view of the president, the Ministry of Transport and Communications, which is the main LSC shareholder, has been passively watching the worsening situation of the company for years and does not look for the necessary and effective solutions as some of the company’s vessel were arrested by in May.

“According to the president, it is unjustified negligence to remain silent for two months and hide the situation. The situation has dragged on and the line was crossed. The Ministry must not give empty promises but take resolute actions. First of all, the president believes that people who are stuck in foreign ports must be taken care of. Next, the necessary decisions must also be taken for the future of the company, no matter how painful they are,” said Ulbinaitė and added that this case only proves that management of state enterprises is stagnated and faulty. The president believes that the quality of management in state enterprises must change immediately.

On the onset of the global shipping market downturn, starting from 2008, the company’s performance became loss making whereas the generated operating revenue was insufficient to cover the financial obligations. In order to reduce the financial burden, in 2013-2015 ‘Lithuanian Shipping Company’ sold six vessels and most of the funds allocated to reduce the commitments.

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