The DIV metal engineering and shipbuilding group has filed for pre-bankruptcy proceedings before the Zagreb Commercial Court due to its inability to service its debt of 41.69 million kuna (€5.56 million) that fell due in mid-April.

The group employs a total of 4,000 workers. It is the biggest employer in the southern Croatian town of Knin where it employs 15 per cent of the town’s working-age population, and owns Europe’s largest screw manufacturing factory that exports to European markets, notably the EU, North Africa, the Middle East and America, according to the application filed.

Noting the importance of it and its subsidiaries for the national economy, DIV asked the court to open its case as soon as possible, adding that it would submit a restructuring plan within the statutory deadline.

DIV’s bank account was blocked in mid-April after it extended financial support to the Brodosplit shipyard due to the problem with the refinancing of loans from the VTB bank and subsequent moves by suppliers. It said that the loans from VTB, a bank owned by the Russian state, could not be drawn in full because of sanctions imposed on Russian banks following the Russian military invasion of Ukraine.

Brodosplit said earlier its access to €60 million was blocked because it was financing the construction of two vessels with money from VTB Europe, a Russian-owned bank based in Frankfurt.

“That is why the financing of Brodosplit’s two largest projects has been halted, and DIV has financially helped Brodosplit so that these projects would not stop,” DIV told the Croatian state news agency Hina on 15 April. “We have invested €60 million of our own funds in the two projects, instead of €30 million as planned, and that has financially exhausted us. This lack of financing and our public announcement of the problem of force majeure prompted some of our suppliers to request payment of their claims, both due and not due, which has resulted in the blockade of the accounts of the DIV Group and Brodosplit.”