The majority of creditors of Liberty Ostrava, the stricken Czech subsidiary of struggling British Liberty Steel, have backed the company’s restructuring plans.

A court moratorium protecting the largest Czech steel mill against some 1,300 creditors was also extended last month.  

The renewal of the moratorium and creditors' approval of the restructuring plan mean that Liberty Ostrava can move forward with ramping up production at the plant, which was shuttered at the end of last year, with  most of its approximately 5,000 employees being told to stay home on full pay. 

Unions say up to 30,000 jobs in total are dependent on the plant in what is one of Czechia’s poorest regions.

Recently it has restarted some operations. It has denied that the restructuring plan includes large-scale redundancies.

“The approval of the plan is another positive impulse for our company, which has already put into operation a large part of its tracks. More than 1,700 employees and the number of contracts is growing,” said  Liberty Ostrava’s press spokesperson, Katerina Zajickova.

Liberty Ostrava said that 90% of creditors backed the plans. The voting is subject to court confirmation, which is expected to pave the way for the restructuring.

However, negotiations are still stalled with its largest creditor,  Tameh Czech, its key energy supplier, which used to be part of the plant under previous ownership and which was excluded from the vote. Tameh Czech stopped energy deliveries late last year, claiming CZK2.2bn in missing payments from Liberty Ostrava and later declared itself insolvent. 

Czech business daily Hospodarske Noviny and Czech Television reported that Tameh would challenge the voting. Tameh’s claims amount to 40% of the Liberty Ostrava liabilities, Tameh stated. “We insist that Liberty Ostrava manipulated  the voting about its restructuring plan with an aim to eject its largest creditor,” Tameh’s Patrik Schober told Czech media.  

As part of the restructuring backing, creditors  voted to eject Tameh Czech from the list of creditors.  “A majority of creditors agreed also with the ejection of Tameh”, Liberty Ostrava’s Ivo Sterba was quoted as saying by CT.

Czech Press Agency (CTK) noted that the restructuring plan consists of two variants – variant A involving an agreement with Tameh and variant B without Tameh. Under the A variant, Liberty Ostrava would pay off its creditors by spring 2026, and under the B variant, it would do so by the end of 2025.

According to Liberty Ostrava, outstanding liabilities amounted to CZK16.4bn (€0.65bn) at the end of February. 

“The aim of our plan is for the company to be profitable again, pay the liabilities of our undisputed creditors and for the Ostrava mill to relieve itself from the pressure of Tameh Czech,” Liberty Steel’s CEO for production in Europe, Theuns Victor, was quoted as saying by CTK.     

Liberty Steel's struggling operations in Czechia, Romania, Hungary and North Macedonia have become collateral damage in the British-based steel group’s wider financial crisis.

The Czech government accuses Liberty Steel of not communicating with it and also alleges that the group owes money to the Ostrava company. 

Earlier this month, Czech Minister of Industry and Trade Jozef Sikela criticised Liberty Group following his talks with the owner, Sanjeev Gupta, stating that Liberty Group should return CZK10bn to the Ostrava plant.

It is not clear exactly what this figure refers to. Zajickova told Czech media that since December, the group has provide CZK0.9bn to the Ostrava plant.  

The government is now reportedly refusing to give it a further reported CZK5bn (€200mn) in carbon credits because of a fear that these might be moved out of the country to plug holes in the finances of some of the group's other plants. According to the online news outlet Seznam Zpravy, Liberty Ostrava also needs to provide evidence to the Ministry of Environment about renewed production to secure the credits.