You're reading: Battle for Kyiv-based Ukraina mall heats up in Irish courts

Courts in Kyiv have upheld a dubious $45 million debt claim over the property by a mysterious British Virgin Islands company.

The nephew of an Irish former billionaire has admitted in a Dublin court that he signed a document to shift debts owed by Ukraina shopping mall in a move to keep one of Kyiv’s largest downtown retail centers out of the hands of an Irish bank.

The battle for control over the Ukraina mall has jumped between Kyiv and Dublin in recent months amid claims that property tycoon Sean Quinn is using illegitimate means to keep control of foreign real estate that Irish state-owned lender Irish Bank Resolution Corporation is trying to seize after he was declared bankrupt last year.

The Ukraina affair shines a light on the way murky court decisions are used to manipulate ownership of assets – a problem that scares off foreign investors.

The latest admission by Peter Quinn, Sean Quinn’s nephew, muddies the waters about who owns the mall, which IBRC has spent months trying to seize, but has been thwarted by local courts that it says are being manipulated by the Quinns.

The bank has been unable to take control of the Kyiv property, which is estimated to be worth $78 million, and its estimated $10 million yearly rent since April 2011. The bank has been prevented in Ukraine’s commercial court system by the property’s former management, which still retains control of the shopping center.

Quinn Holdings Sweden, the 93 percent shareholder in the shopping mall’s management company controlled by the bank, has failed to register a management change at the property. Sean Quinn denies any wrongdoing and accuses IBRC of destroying his business.

In testimony in recent months, Peter Quinn has described how he signed a document related to a debt of $45 million owed by Univermag, which owns Ukraina mall, to Desmesne Investments Ltd., which was run by the Quinns. He said the document reassigned the debt from Desmesne to a new company, Innishmore Consultancy Ltd., also controlled by the Quinns.

The debt was then transferred to a company in the British Virgin Islands called Lyndhurst Development Trading. This could give Lyndhurst priority over IBRC in reclaiming debts owed.

IBRC alleges that the Quinns are still in control of the shopping center by way of offshore companies and other means. It says the Quinns are in contempt of court for continuing to shift assets even after the lender gained court orders last year to stop this. A Kyiv court on May 18 upheld Lyndhurt’s debt claim, despite an Irish court injunction preventing Lyndhurst from retrieving the debt, which the bank claims is fraudulent.

Peter Quinn said he believed both the Quinn Group and the bank had been tricked by the mall’s management. On March 30, he testified that Larysa Yanez Puga – the former director of the shopping center’s management company Univermag – was behind Lyndhurst and that he had trusted her once but not anymore. Puga could not be reached for comment. Quinn’s nephew also said that at one stage his lawyers and the bank’s lawyers had met at his suggestion, because of his fear that neither side would end up with the shopping center in Kyiv.

IBRC claims the Quinns were still linked with Puga in August, when they allegedly gave her a “golden parachute” payment of $500,000. The Quinns deny the payment was made.

The judge is expected to rule whether the Quinns were in contempt of court on June 6.

Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].