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Evgeny Zverev commented on the much-publicized arbitration cases in St. Peterburg

12 April 2013
The period of 2012 –turn of 2013 abounded with high-profile judicial disputes. Some of lawsuits are completed, others still drag on. Anyway, they attract the attention of professional lawyers community and of wider business audience. The editors of RBK selected five most prominent arbitration cases of the past year. Our top-5 includes: the most long-lived judicial dispute, the biggest claim costs reimbursement, the most far-fetched claims, the fastest bankruptcy and the most unusual approach to a lawsuit.

Loser pays

An arbitration case which resulted in claim costs reimbursement of 6.6 million rubles (biggest reimbursement of court costs in the North Western region) was terminated in the end of March, 2013; this case is unprecedented. Legal fees amounted to 13.2 million rubles: this huge amount of money was spent by OOO Ofset so as to win a lawsuit against OOO Promsvyazbank for the total amount of 126 million rubles. The illegal way the bank executed a letter of credit became the trigger for the lawsuit. The bank has written an amount off the account without duly verifying the document, and that incident became the matter of criminal case. The bank was totally defeated in arbitration: they turned to cassation court, but were not supported by the justice.

According to lawyers of S&K Vertical which represented the claimant’s interests, is a significant contribution to practice of reimbursement of representation expenses by a party to case. “The order accepted by Arbitration court of St. Petersburg and the Leningrad region inaugurated a new approach to litigation costs, and offered the parties in dispute a hope for a just and full compensation for such costs,” noted the lawyers. However, the bank presented a petition of appeal so as to obtain compensation for litigation costs, to be examined in May.

Shoot 'em up bancruptcy

Bankruptcy proceedings of the Faeton holding companies drag on for almost four years. Bankruptcy petition of OOO Faeton-Aero (main company of the holding) was filed in May, 2009. Two years later, the enterprise started going bankrupt. The total accounts payable of the holding exceeds 5 billion rubles. Currently about 10 companies of the holding that operated in diverse industries (from fuel production to agribusiness) are involved in bankruptcy proceedings. Creditors include the largest banks: VTB, Sberbank, Yunikreditbank, etc.

The lawsuit concerning bankruptcy of the holding was followed by discovery of previously unknown heavy borrowers, challenge of decisions made by the board of creditors, attempts to change the official receiver and other dramatic events.

According to Denis Lebedev, the official receiver (the court has dismissed the claim for his removal from office), during the period of dealing with debts of the holding he was put under pressure, moreover, people fired shots at him. On April 25, the cassation court will resume hearings on the issue of Lebedev’s removal from office.

Besides, in March, 2013 the arbitration court issued an order to initiate liquidation of OOO “Shpalernaya, 1” which is part of “Faeton” holding; the bankruptcy management shall last for a period of 6 months. Should the next judicial instance uphold the decision, then the business center located on Shpalernaya Street (priced at 333 million rubles) shall be put out for tender within 6 months.

Mislead by Misprints

The conflict between GU Directorate for construction of St. Petersburg By-pass of the Federal Road Agency (hereinafter referred to as “DSTO”) and OOO Lentransstroy, the subsidiary structure of manufacturing group “Vozrozhdenie” flamed up in the last fall. The tender for the right to service KAD triggered the conflict: DSTO as the organizer of tender has three times prevented OOO Lentransstroy from participating in the tender procedure. All the refusals were justified by misprints: one of typographical errors was found in the title of case information, another two - in constitutive documents of the company. All the refusals were appealed by “Lentransstroy” with the Federal Anti-Monopoly Service. The latter has repeatedly ruled as illegal the actions committed by DSTO actions when carrying out the tender.

The dispute between participants was also submitted to Arbitration courts of Moscow and St.-Petersburg. “Lentransstroy” has filed two lawsuits (that currently are pending) aimed at the cancellation of results of tender. There is also a pending lawsuit filed by industrial group “Rosdorstroy” (which has invariably been awarded the tender for the right to service KAD since 2009), whereby DSTO is required to sign a contract with “Rosdorstroy”. In their turn, DSTO will challenge in court the decision of FAS concerning cancellation of the tender; the hearing will take place on May 21. It should be noted that the Moscow Arbitration court already denied examination of claim filed by Directorate, because the Arbitration court just could not make out, what legal rights of DSTO were violated by the decision of FAS if the latter acted according to the RF legislation.

In the mean time, the KAD is still cleaned by “Rosdorstroy”, subject to temporary contracts, notwithstanding that in February, 2013, the St. Petersburg Arbitration court imposed interim measures on the contract, to be in effect until the winner will be determined.

In the end of March, 2013, “Lentransstroy” was admitted to the tender and won it, offering the lowest amount of 1,392 billion rubles. At the request of DSTO, the company petitioned the St. Petersburg Arbitration court for cancellation of interim measures; the motion was satisfied on April 3. “Lentransstroy” has submitted a copy of ruling to DSTO on April 9; however, the contract has not been signed so far. Lawyers of Lentransstroy are convinced that DSTO has no legitimate reasons for that. Probably, the Directorate still fails to overcome the desire to prevent the subsidiary structure of “Vozrozhdenie” from working on KAD.

Fruit-related business bears bitter fruit

The bankruptcy of JFC group proved to be most sensational and unusual bankruptcy case in St. Petersburg business community. Not only Vladimir Kekhman, the owner of JFC group was declared bankrupt by decision of the London court (according to experts, this fact can protect him from creditors), there is more: temporary travel restrictions were imposed on him, due to his large outstanding debt. However, the district court has soon suspended this decision, and Vladimir Kekhman ceased to be travel banned. After all, Kekhman is the director general of Mikhaylovsky Theater, that’s why his case hogs the limelight.

The JFC group was established by Vladimir Kekhman long before he turned a new leaf in his life-book, which is connected with theatre. The history of bankruptcy began last year. Sberbank and Bank of Moscow are the biggest creditors of the JFC group. The list of creditors also includes Rosbank, Uralsib, Promsvyazbank, Raiffeisenbank and Bank Saint-Peterburg. Total loans outstanding exceed 18 billion rubles. Several companies of JFC group are currently in the process of bankruptcy. For instance, the Arbitration court of St. Petersburg and the Leningrad region still considers the bankruptcy case of OOO Group JFS; the observation procedure for this company was imposed in March, 2012. The arbitration court also examines the cases of two subsidiary structures of JFC, i.e. OOO Cargo JFS and OOO Bonanza International.

Bankrupt for a day

Bankruptcy of “Lenfilm” became the fastest arbitration case of the last year. GUP “Toplivno-Energetichesky Kompleks Sankt-Peterburga” filed their claim on November 7, 2012, however, 2 days later, the company submitted a notice of withdraw from proceedings. The film studio had 500 000 rubles in debt which gave occasion for insolvency process. As to withdraw from proceedings, it resulted from an arrangement between directors of the companies.

2012 proved to be quite troublesome for the oldest film studio: throughout the last year, the courts were considering actions for recovery of debts; these lawsuits partly drag on in the current year. On April 10, 2013, court session will be held to consider the claim for recovery of 3 million rubles from Lenfilm.

“Self-bankruptcy” is in trend

Experts tend to highlight the two growing trends typical of the current arbitration practice. These are increasing amounts of money paid as claim costs reimbursements by the defeated party, and the growing number of the so-called “self-bankruptcies”.

Evgeny Zverev, Senior Associate of the law firm S&К Vertical points out that “in the international legal practice, people often refrain from filing unmaintainable actions because of the risk of incurring expenses related to claim costs reimbursements to the other party; recently, the similar behavior occurs in our country.”

Dmitry Lipatov, partner of the “Nalogovik company”, believes that “Recent judicial practice shows amazing examples of how a director general can be made liable for company’ debts; this trend is also promoted by the new interpretation of directors’ responsibility provided by the Supreme Arbitration Court. Growing number of “self-bankruptcies” is not only indicative of the current economic situation, it also bespeaks the development of practice in applying the law law- concerning personal responsibility of top managers. Should a company fail to timely file bankruptcy its director can be hold liable for company’s debts.”

Evgeny Zverev confirmed the abundance of insolvency cases, at the same time, he pointed out that there is no extraordinary growth. “Practice of insolvency cases becomes more stabilized, parties and courts are gradually learning new approaches to challenging transactions concluded by bankrupt entities, subsidiary liability of persons supervising the bankrupt,” he said.

Actually, experts believe that bankruptcy gradually ceases to be an instrument used to gain possession of debtor’ property (enterprise takeover) or, alternatively, to help debtors to avoid taking on responsibility, and becomes the right way to settle disputes with creditors.


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