The M&A arm of Russia's Alfa Group won a landmark victory on July 17, after a court in Kazan decided that a state-of-the-art logistics park in the autonomous republic of Tatarstan owed $60m to its former owner, thus effectively returning control of the asset to the Irish government.
It is the first time that a Russian entity has acted on the behalf of a foreign government to recover assets in Russia. A1 is the special situations vehicle of Alfa Group (formerly known as Alfa Ekho) that specialises in recovering distressed assets.
In April, A1 went into a joint venture with the Irish Bank Resolution Corporation (IBRC), which has been trying, so far unsuccessfully, to recover 12 assets that used to belong to Ireland's now-defunct Quinn Group.
Sean Quinn, the founder of the group, defaulted on loans worth €2.8bn from the Anglo Irish Bank, which went bust and its assets were taken over by the state-owned IBRC, which has been trying to convert them back into cash.
However, parties believed to be associated with Quinn transferred the ownership of the assets to various shell companies, putting them out of the reach of IBRC, which turned to Alfa Group for help.
The court in Kazan ruled that Q-Park, a state-of-the-art logistics park that was set up by Quinn in Kazan, owes its former owner Demesne (and a subsidiary called Logistika) $60m in debt from its construction and other funds.
The ruling means that A1 can now appoint its own receiver over the park and start the process of preparing it for sale. Most importantly, A1 will get effective control over the park's cash flows even while the appeals - if any - are held, the crucial point in any Russian dispute over assets.
A1 said in a statement: "It later turned out that on May 11, 2011 the shares of ZAO "Logistica" have been sold to Sean Quinn, Jr.; on June 3, 2011 shares were resold to ZAO "Vneshkonsalt" and in fall of 2011 - sold to two Panama companies - Forvar Overseas S.A. and Lockerbie Investments S.A. These acts were allegedly committed in order to eliminate the [IBRC] from the corporate control of ZAO "Logistica" and foreclosure on the assets of ZAO "Logistica"."
Two shell companies - Vneshkonsalt and another creditor to many of the disputed assets, Stroitelnie Tekhnologii – are names that have come up again and again according to A1, as the owners of almost all of the disputed assets, including Q-Park.
All in all, IBRC and A1 are trying to recover 12 assets in Eastern Europe (11 in Russia and the Ukraina shopping mall in Kyiv) collectively worth some $500m.
Q-Park is the second most valuable, but the most expensive is the Kutuzov Towers in central Moscow that is worth an estimated $150m. Work on recovering that has already begun, but will take up to 18 months to complete says Andrei Polyakovsky, spokesperson for A1.
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