Lviv bus plant. Photo: Zaxid.net
After more than a decade of downtime and bankruptcy, Lviv Bus Plant (LAZ) has a chance to resume operations thanks to a new investor. According to liga.net, the Commercial Court of Lviv Region suspended the liquidation of PJSC Municipal Transport Plant (formerly LAZ) on 2 October 2024. The rehabilitation plan provides for the repayment of the company’s debts by the end of the year by attracting investments.
The main investor was businessman Andriy Lutsky, owner of Lviv Invest City. In 2023, Lutsky acquired control over a number of the plant’s assets, after which his company developed a strategy to restore production capacity. Lutsky’s press office confirmed that he intends to restart the plant and introduce modern technologies at the enterprise.
Debt repayment and rehabilitation plan
According to the court ruling, Lviv Invest City will become the owner of most of LAZ’s real estate. The company will receive financial support in the amount of UAH 650 million from another investor, Lvivinvestactive. These funds will be used to pay off debts to tax authorities and creditors, as well as to reconstruct the plant’s production facilities.
One of the key points of the rehabilitation plan is the transfer of part of the assets of the Lviv Invest City plant to maintain the viability of the enterprise. By the end of 2024, the company plans to fully repay its tax arrears and liabilities to creditors. It is estimated that after the completion of the rehabilitation, LAZ will be able to get rid of its debts and restore profitability.
History of LAZ bankruptcy and privatisation
Lviv Bus Plant, once one of the largest transport producers in Ukraine, was privatised in 2001. More than 70% of the shares were acquired by Sil-Auto LLC, a company controlled by Russian businessman Igor Churkin. The privatisation did not benefit the company: massive layoffs, salary delays, and later asset sales began.
In 2014, LAZ finally stopped production due to conflicts between Churkin and local authorities. During the liquidation procedure, the plant managed to repay only UAH 16 million of its debts, while the total amount of creditors’ claims at the time of the rehabilitation plan was over UAH 590 million.
Revival of the plant
The rehabilitation plan stipulates that Lviv Invest City will assume liabilities in the amount of UAH 140.5 million to repay the claims of creditors and government agencies. The sixth priority creditor claims, which include fines and penalties, will be written off. Unusable equipment is to be sold and usable equipment is to be leased.
After the successful implementation of the rehabilitation plan, LAZ is expected to be free of financial liabilities and return to profitable operations. The successful implementation of this plan opens up new prospects for the company, which was once an important vehicle manufacturer in Ukraine.
Context and future prospects
The privatisation of LAZ had dubious consequences that led to the plant’s decline. Igor Churkin has repeatedly been involved in scandals related to misconduct at the plant. In 2022, he was suspected of fraud, and in 2023, he was charged with seizing LAZ’s assets worth over UAH 367 million.
With a new investor, LAZ gets a chance to revive and re-profile. Thanks to the rehabilitation plan and investments, Lviv Bus Plant can once again become an important player in the transport production market.
