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United Silicon Files for Bankruptcy

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United Silicon Files for Bankruptcy

United Silicon, Helguvík.

Photo: Screenshot from RÚV.

United Silicon has requested to begin bankruptcy proceedings through the District Court of Reykjanes, RÚV reports. The moratorium on the company expired yesterday. There has been no production at the plant since operations ceased in September.

United Silicon was granted a moratorium in August. The moratorium was then extended on December 4th, expiring yesterday. The board of directors decided to file for bankruptcy after it concluding an agreement could not be reached with creditors and there were therefore no grounds for requesting another extension on the moratorium.

An announcement from United Silicon stated the Environment Agency of Iceland demanded operations remain suspended until extensive improvements were made on the plant, which could take up to a year. A Norwegian consulting company has estimated the cost of the improvements to be ISK 3 billion (USD 29 million/EUR 24 million).

Arion Banki bank owns two thirds of the company, and has invested in research and analysis of the plant's situation since the moratorium took effect. Bank audits have revealed disorder and grounds for suspicion of embezzlement by Magnús Garðarsson, the company’s founder. He has been sued through the district prosecutor’s office.

Research on the plant’s equipment revealed that although the basic design of the furnace was adequate, the equipment used was cheap and poorly made, making malfunctions a frequent occurrence.

Production began in the plant in November 2016. The Environment Agency of Iceland began receiving complaints of pollution shortly thereafter. Some residents in the area experienced physical symptoms such as eye irritation, respiratory difficulties, and headaches due to effluence from the factory.

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