PRESS RELEASE: Outcome of the case of Ukraina department store and Inturist Zakarpatye complex could affect the image of the country as a whole, says expert
The developments in the case of the Ukraina shopping mall and in other similar cases affect, first and foremost, the interests of the state, and not only those of individual owners. This was stated by the acting director of the shopping mall Rostislav Levinzon during his speech at the first in 2012 session of the URE Club Committee on legal issues. According to the speaker, the outcome of such cases will determine the investment climate in the country, as well as shape the attitude of foreign companies about the conditions for doing business in Ukraine as a whole. During a session of the URE Club Committee on legal issues that took place on March 13 at the President Hotel, the participants discussed the situation surrounding the public company "Univermag "Ukraina" (majority shareholder – Quinn Holdings Sweden AB), as well as a similar case involving the seizure of the public company "Inturist Zakarpatye", whose major shareholder is the investment group "INEKO." The experts participating in the session noted that both cases have much in common. For example, litigations in the case of the "Ukraina" shopping mall, as well as in the case of the "Inturist Zakarpatye"complex, involve lawsuits filed against majority shareholders by minority shareholders, and in both cases the developments unfolded very quickly. According to the lawyers, the urgency of the activities can be explained by the desire of one of the parties in the conflict to avoid extensive publicity around the litigations and the circumstances surrounding them. However, as experts have noted, active PR campaigns that ran in parallel with the litigations, and the involvement of the press in the abovementioned cases, negated these tactics by consistently informing the public about the progress and results of the relevant court proceedings. Another common aspect in the cases of the mall and the complex have been the actions of one of the conflicting parties, which aimed to exploit a series of legal and economic processes to declare the companies bankrupt. As became known from a statement at the session by vice-president and general director of "INEKO" Stanislav Lyudkevich, control over the recreation complex has currently been regained, but issues related to the altered demands of the creditors, which could potentially bring the company to bankruptcy, remain unsolved. The acting director of the Ukraina shopping mall is also confident there will be a positive outcome in the case. In particular, he noted: "I'm convinced, that sooner or later the situation at the shopping mall will be resolved in favor of the real owner. If it happens soon, the winner will be not only the owner, but the state as a whole, since it will be able to declare firmly that the interests of foreign companies in Ukraine are protected. If it happens later – the trust of foreign players will be lost for a long time to come". The lawyers, meantime, stressed that statistically success in such court proceedings is rarely on the side of the real owner of the assets. In addition, during the first in 2012 meeting of the URE Club Committee on legal issues, experts discussed the introduction of possible changes to the organizational-legal structure of companies, with the view to reducing the risks of raider seizures and contentious issues between majority and minority shareholders. As noted by Vasyl Kysil, partner in the law firm KPD Consulting and head of the Committee on legal issues, "as a form of organizational structure, the joint-stock venture with 'uncontrolled' minority shareholders and a long corporate history has proved to be most vulnerable to the attacks of raiders." One of the possible solutions, according to experts, could be the transformation of joint-stock ventures into limited liability companies (LLC), although this move also involves a whole range of legal challenges, and in many cases is simply impossible. The only sensible alternative when it comes to re-organization, according to the experts who participated in the discussion, is the introduction of a legal mechanism for the buy-out of the minority stakeholders’ shares by the majority shareholder. Concluding the meeting, Rostislav Levinzon added: "We're convinced that there are people at the highest national political level who understand the seriousness of such situations in the context of the state's long-term interests, its investment climate and international reputation. It is this understanding of the gravity of the case of the Ukraina shopping mall for the state as a whole that allows us to hope for a positive outcome of our cause." The press release has been issued on commercial terms. The Interfax-Ukraine News Agency is not responsible for its contents.