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A court declared bankrupt on Wednesday the KAP aluminium plant, sticking foreign banks with hundreds of millions of losses but which could expose the Montenegrin state to a billion-euro claim from Russian oligarch Oleg Deripaska.
"The deadline has expired for submitting plans for restructuring of the company, fulfilling the conditions to declare bankruptcy," judge Dragan Rakocevic told reporters.
Rakocevic said that KAP's property would be offered for sale in a few weeks, "in part or in full."
The aluminium smelter is estimated to owe 360 million euros ($490 million), mostly to foreign banks, including including Deutsche Bank, Hungarian OTP bank and Russian VTB bank.
The debt is worth almost nine percent of the Balkan country's gross domestic product (GDP).
The application for bankruptcy was made in July by the Montenegrin government, which owns 29.36 percent of the smelter.
Deripaska's Central European Aluminium Company also owns a 29.36 stake and has warned it will demand international arbitration seeking one billion euros in compensation from Montenegro.
The remaining 41 percent are in hands of small shareholders.
In May, the International Monetary Fund (IMF) recommended Montenegro to shut down the facility.
Since July, the company fired 500 people. But even with the remaining 700 employees, the Aluminium Company Podgorica (KAP) is the biggest industrial employer in the country of some 660,000 people.
Once Montenegro's biggest exporter, KAP accounted for 4.7 percent of country's economic output in 2012.