Residential Complex Emerald
Alfa-Bank Ukraine has won a court ruling over a portion of the Izumrudny residential complex, one of the largest projects of the development company NEST, owned by brothers Vadim and Vladimir Trofimenko. The Kyiv Commercial Court upheld the financial institution's claim, ordering the transfer of part of the property on Mekhanizatorov Street in Kyiv to the bank. Previously, ownership of the property was retained by Renessans, a company controlled by the Trofimenko brothers. NEST claims the court's decision is unlawful and plans to appeal it.
LIGABusinessInform investigated the twists and turns of the conflict between developers and the bank.
The residential complex was commissioned in 2011, and all apartments within it were sold in 2013. The dispute concerns 52 non-residential premises with a total area of approximately 7500 square meters. Alfa-Bank claims that the bank sought to transfer ownership of these premises through the courts due to non-payment of multi-million-dollar loans, the right to claim which the bank received through an assignment from the Bank of Cyprus.
In 2008, Renaissance, the client for the Izumrudny residential complex, opened two lines of credit with the Bank of Cyprus for a total of $70 million secured by 7500 square meters of non-residential premises in the complex under construction. The court ruled that the collateral value at the time of the loan agreement was 156 million hryvnias. This was insufficient to repay the debt. "For a long period, Renaissance PJSC failed to meet its obligations to pay interest and repay the loan. The outstanding balance on the overdue loan principal and interest exceeded $36 million, which prompted Alfa-Bank to demand early repayment in May of this year. Since Renaissance ignored this demand, the Bank initiated legal proceedings to collect the debt," Alfa-Bank's press service stated in response to a request from LIGA Business Inform.
NEST defends itself by arguing that the loan was taken out not from Alfa-Bank, but from Bank of Cyprus, and that the company was not notified of the change of lender. "Renaissance did sign loan agreements with Bank of Cyprus. No loan or other agreements were signed with Alfa-Bank. We did not receive any documents from Bank of Cyprus regarding the assignment of claims under the loan agreements. At Bank of Cyprus's insistence, all legal issues regarding the loan agreements were to be resolved under Cypriot law in foreign jurisdictions based on the English versions of the agreements," asserts NEST Marketing Director Vitaly Lebedev in an official response to a request from LIGA Business Inform.
However, the Ukrainian court ignored this circumstance. In addition to the aforementioned case, the courts sided with Alfa-Bank in four other disputes with NEST. The bank is close to winning the Renaissance Business Center (16,000 square meters) on Vorovskogo Street and the parking lot on Kudryashova Street (Vremena Goda residential complex) from the company. "The court also recovered the debt from the borrower, Renaissance, and the guarantor, Vyrobnychiy Vektor," Alfa-Bank clarified.
NEST intends to challenge these court decisions and complain about the incompetence of the judges who committed violations in the courts' work. "One of the hearings ended at 22:00 PM, which is a gross violation of the Kyiv Commercial Court's rules of procedure. We have questions about the competence of the judges who, without obtaining proper evidence or verifying the calculations, issued such questionable decisions. Therefore, we are preparing corresponding complaints to law enforcement agencies and judicial self-government bodies," Lebedev said.
Alfa-Bank has no intention of becoming a Moscow rentier—all foreclosed properties will be put up for sale, the bank announced. However, the financial institution declined to comment on the auction timeframe or the estimated price of the properties.
USEFUL DATA
NEST is a construction and management company whose portfolio, in addition to the controversial Izumrudny residential complex, includes the business centers Renessans, NEST, and Iceberg (sold to Kazakh businessman Mukhtar Ablyazov), as well as the residential complexes Vremena Goda and Pokrovsky Posad, among others. The company has built over 74,500 square meters of office space and over half a million square meters of residential real estate. The company was founded in 1997 by brothers Vadim and Vladimir Trofimenko.
Alfa-Bank Ukraine was registered in January 2001. It is part of Mikhail Fridman's Russian Alfa Group. It is the ninth-largest bank in Ukraine by assets (UAH 37 billion as of early September). In April 2014, Alfa-Bank closed the acquisition of the Ukrainian subsidiary of Bank of Cyprus.
League. Business
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