The Podgorica commercial court declared aluminium firm KAP bankrupt on Wednesday, Oct 9, clearing the way for the start of its debt-free sale, news agency Mina-Business reported.

The head of the court, Dragan Rakocevic, told the agency he adopted the decision on the bankruptcy on Wednesday morning.

Rakocevic said earlier this week that the deadline for submitting restructuring plans for KAP has expired and therefore the conditions for declaring bankruptcy, or the so-called classic insolvency, at the firm have been created.

KAP’s assets can be now offered for sale - but according to Rakocevic the best solution for the troubled company will be to be sold as a legal entity, if its creditors agree on the move. The domestic law now allows the debtor to be sold as a legal entity, in which case the buyer could keep the name of the company and continue its business free of any liabilities.

The money earned from the sale will comprise the insolvency fund that will be used to reimburse creditors. According to Rakocevic, experts will evaluate KAP’s assets in the coming 20 day, after which a public tender for its sale will be called.

The company’s book value was estimated at just above EUR 180mn earlier this year after it entered insolvency in July. The creditor claims against KAP, however, total EUR 460mn and insolvency receiver Veselin Perisic has approved almost EUR 360mn of them – and challenged the remainder.

Perisic said on Wednesday it is illusive to expect KAP would be sold at a price big enough to meet the claims of all creditors.

The largest creditors are the Montenegrin government with claims worth EUR 148.1mn, followed by KAP’s former owner Russia’s CEAC with some EUR 50mn, energy firm EPCG with EUR 44.9mn, En+ Group (the owner of CEAC) with EUR 43.4mn and Russia’s VTB Bank with EUR 25.8mn.

Investors from India, Germany, Poland, Turkey and Croatia have already indicated they are interested in taking over debt-free KAP  but none of them has yet sent a concrete offer to the government.