More litigation has been thrown into the melee for control over Kyiv’s lucrative $50 million Ukraina department store.
Kyiv Economic Court injunctions on Nov. 4 and Nov. 10 have prevented Ukraina’s newly appointed acting director from receiving official registration with a state body, claiming that the shareholders meeting that appointed him was illegal.
Lawyers from Magisters, representing a foreign majority shareholder and an Irish Bank trying to foreclose on the property, allege that minority shareholders have unwittingly enabled lawyers to file court claims on their behalf preventing the new director from obtaining legal recognition.
Rostyslav Levinzon was appointed acting director following an extraordinary shareholders meeting on Nov. 7. Since, he hasn’t been allowed entry into the shopping center’s management office by the previous management.
Quinn Group, once belonging to Ireland’s former richest man, Sean Quinn, and his family controlled the shopping center through a Swedish subsidiary before becoming insolvent. The state-owned Irish Bank Resolution Corporation has been trying to recoup some $4 billion in alleged losses from the holding company, $675 of which are international properties in Ukraine, Cyprus, Russia and Sweden.
However, Quinn filed for bankruptcy in a Northern Ireland court on Nov. 11.
Yet after the bankdruptcy filing, a commercial court in Ireland has made two judgements ordering Quinn to pay a total of nearly $2.7 billion to IBRC.
Magisters associate Dmytro Marchukov said that at least two court cases had been filed in Kyiv on behalf of two retired minority shareholders that had previously been approached by unknown individuals offering to buy their shares in the shopping center.
In both cases they signed over power-of-attorney to the lawyers to handle the details of the transaction because the process is lengthy and complicated.
Instead, Magisters’ Marchukov alleges that the pensioners’ identities were used to file court claims disputing the legality of the shareholders meeting.
One of two such claims was based on a fictitious online announcement of a shareholders’ meeting cited by a retired person. Marchukov observed that retired persons in Ukraine rarely use the internet.
Court documents in that particular case show a judge being assigned to the case a day before the court claim was filed. By law, judges are supposed to be assigned to cases randomly.
Instead of giving the claimant the injunction orders in both cases, the judge sent the records to the state registry, a rare legal practice in Ukraine.
In contrast, Magisters claims their counter-lawsuits to lift the injunctions have not been processed as quickly as the injunctions have.
“All this makes us feel that now we have to deal with some frivolous unjust conveyor of injunctions,” said Magisters’ Marchukov.
The legal associate said there is at least one other case pending on behalf of a minority shareholder and he assumes there are more in Kyiv’s economic courts.
There are some 4,000 minority shareholders in Ukraina shopping center.
Robert Dix, the Irish-based appointed chairman of Quinn Finance, the ultimate holding company of the international properties now controlled by the Irish government, has accused Quinn family representatives of using raider tactics to thwart its attempt to install a new director and assume control over the shopping center.
Dix said he suspects Quinn and his family are “using every legal tactic to frustrate the rule of law,” and are keeping the properties "beyond the reach of creditors."
Dix is a former partner with big four accounting and audit firm KPMG in Dublin.
A spokeswoman for Quinn Group denied any involvement in the dispute, which was even raised during talks between President Viktor Yanukovych and Irish Prime Minister Enda Kenny when the two met in Warsaw on Sept. 29, according to an Irish diplomat.
Quinn said he was "shocked" that government ministers had "interfered" in court proceedings abroad, in a statement he made on Nov. 28. "I think this is an abuse of public office," he said.
“Quinn group has no involvement with these assets,” said Mona Bermingham, Quinn Group public relations officer.
For its part the Quinn family has challenged the legality of the loans issed to it by IBRC.
Meanwhile IBRC has launched a media campaign in Ukraine to try to put pressure on authorities to intervene in the dispute over control of the mall. An open letter to Prime Minister Mykola Azarov published in several Ukrainian publications, including the Kyiv Post, and websites dated Nov. 11 said that Quinn Holdings Sweden – the subsidiary that owns 92.75 percent in Ukraina mall – had decided that maximum publicity concerning what was happening was the best way in which it can protect its assets.
“We intentionally decided to make the matter public, open to civil society and the business community of Ukraine,” Dix was quoted as having told a Ukrainian court. The campaign includes a website, http://univermagukraina.com.
The Irish Bank has also had its efforts legally frustrated to take control a part of the $95 million Leonardo business center in the capital. Quinn Group controlled it and used shares in the business center as collateral.
Both the Ukraina and Leonardo properties are frozen preventing IBRC from taking control over them.
Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].
