Lithuania's Ukio Bankas seeks to return control over two subsidiaries of Bosnia's alumina plant Birac

Lithuanian lender Ukio Bankas, which has recently taken over Vilnius-based Birac Europe, seeks to return its control over two subsidiaries of Bosnia's alumina plant Birac - Alumina and Mehanika, news service Capital.ba reported.

State-controlled Ukio Bankas took over the management of Birac Europe in January 2014 and appointed a new executive board. The new board has decided to restore the ownership of Birac Europe over the two Bosnian firms as it believes they were taken away from it last year under "an odd procedure", the head of Bosnian law firm Sajic - Aleksandar Sajic told Capital.ba.

Therefore, Birac Europe has authorised the law firm to initial proceedings at Banja Luka's commercial court for annulling the previous decision, under which Alumina and Mehanika were taken from Birac Europe and transferred back to Birac.

If Birac Europe gets back Mehanika and Alumina, this means that Zvornik-based Birac and its current owner - Bosnia's Serb Republic government, will remain without any possibility to control or influence the two firms, which in fact own the whole assets and production process of Birac.

On the other hand, Capital.ba argues in a separate report, if the Lithuanians come at the top of Mehanika and Alumina, this might result in the withdrawal of the BAM 154mn claim filed by Ukio Bankas against the two Bosnian firms.

Ownership dispute background

Under an Apr 26, 2012 decision of Birac's management, the ownership of its two daughter companies - Alumina and Mehanika, was transferred and registered to the newly-set up Birac Europe firm in Lithuania. The assets of Alumina and Mehanika were then used as collateral for the BAM 154mn loan, which now Ukio Bankas claims from them in a separate lawsuit.

When the Serb Republic opened bankruptcy at Birac last year, the bankruptcy manager started a procedure for changing the ownership in order to return Alumina and Mehanika directly under the wing of Zvornik-based Birac. As a result, in July 2013 Birac was again registered as the owner of the two companies.

However, the Lithuanian side, i.e. Birac Europe, considers as "illegal and absurd" the argument of Birac's management for transferring back the ownership - and is therefore asking the court in Banja Luka to annul the decision and restore Birac Europe back as their owner.

Bosnia's Serb Republic-Lithuania's Ukio Bankas relations on Birac

In December 2013, the Serb Republic and the bankruptcy management of Ukio Bankas agreed to form a joint working group that will try to find out how to shorten the court trial and wrap up the bankruptcy proceedings at Birac, formerly controlled by Ukio Bankas.

Ukio Bankas is seeking the BAM 154mn claims from Birac and its daughter companies Alumina and Mehanika - which makes bankrupt Birac one of the biggest debtors of bankrupt Ukio Bankas. The Lithuanians will hardly give up their claim - even though it was turned down by Birac's bankruptcy management.

The prosecutor offices and interiors ministries of the Serb Republic and Lithuania have also established a direct cooperation, speeding up works on the process, the Republic's finance minister Zoran Tegeltija has said. According to him, the Serb Republic and Lithuania are not opponents in the case but are both damaged sides.

Zvornik-based Birac bankruptcy

Birac entered bankruptcy on April 8, 2013 – shortly after the police and tax inspectors raided its premises over suspicions into illegal transactions between connected legal entities. Prior to the bankruptcy Ukio Bankas, which itself went bankrupt in Feb 2013, owned 56.8% in the alumina producer following a 2001 privatisation deal.