Damen Shipyards Mangalia, operating a Black Sea shipyard employing 1,500, 51% controlled by the Romanian state but managed by Dutch group Damen under a contract signed in 2018, has entered insolvency at its own request.

Transilvania Insolvency House (CITR) Bucharest Branch was appointed as the provisional judicial administrator and will have to find the best solutions for the recovery of the company. 

The first step in the insolvency procedure is understanding the business and the segments that weaken the company's performance, followed by defining the recovery strategy and drafting the plan for its implementation.

Concluding that Romanian authorities failed to address the inconsistency between its management agreement sealed in 2018 and new legislation passed in 2023 and failing to reach a dialogue with the Romanian authorities on this matter, Damen Holding requested the insolvency of the Romanian company on May 28. The shipyard filed for its own insolvency two days later. 

Separately, the Dutch group is asking compensation under an international litigation procedure, reportedly in the amount of EUR 500 million, for the de facto termination of the management contract by the Romanian side, Profit.ro reported.

Amid subdued activity at the shipyard, some 70% of the company's employees have already been sent home under technical unemployment due to a lack of contracts that were secured by the Damen group until recently.

The insolvency came after Damen had already asked the International Court of Arbitration in Vienna to terminate the 2018 association agreement, in which the Romanian state became the majority shareholder of Damen Shipyards Mangalia, with 51% of the shares.

In 2018, Damen took over the majority stake (51%) in Damen Shipyards Mangalia from Daewoo under the condition that it would pass a 2% stake to the Romanian state (represented by state-owned Santierul Naval 2 Mai company) in exchange for the management rights. However, the agreement conflicts with legislation passed by Romania in 2023, under the country's commitments taken under the National Resilience Facility and as part of the steps taken towards OECD membership.

iulian@romania-insider.com

(Photo source: Inquam Photos/Daniel Stoenciu)