Sergey Taruta
In early January, bankruptcy proceedings began against one of the country's largest pipe companies, PJSC Dnepropetrovsk Pipe Plant.
Kyiv-based Radical Bank initiated this process. Last year, it secured a decision in the Dnipropetrovsk Regional Commercial Court to recover approximately UAH 19,5 million in debt from the company under a 2012 loan agreement. With the help of enforcement agents, the financial institution managed to recover approximately UAH 11,8 million, but the debtor failed to repay the remaining UAH 7,7 million. This served as the basis for initiating bankruptcy proceedings, which have already initiated a procedure for the disposal of the debtor's assets. The court appointed Denis Tkachenko, an insolvency administrator from Dnipro, as its head, according to Delovaya Stolitsa.
The trial that has begun is noteworthy for several reasons. First, journalists, citing documents found in Mezhyhirya, accused the bankruptcy initiator last year of having ties to the "family." Specifically, Dmitry Sidlyarenko, who served as deputy director of finance for Tantalit, the owner of the Mezhyhirya residence, was identified among the largest shareholders of Radical Bank. Another co-owner of the bank was Mykola Goron, one of the beneficiaries of Kyivuniversalservice, the company that served as the housing and utilities department in Mezhyhirya. Second, the lawsuit initiated by the financial institution could deprive Serhiy Taruta, once one of Ukraine's richest businessmen, of his pipe business. Taruta recently declared himself bankrupt.
Currently, 75% of the Dnipropetrovsk Pipe Plant's shares are owned by the Cypriot company ISHC Industrial Steel Holding Co Limited, which is part of its orbit. The plant specializes in the production of seamless and electric-welded pipes. Before the crisis, it was consistently among the largest in the industry. However, its capacity, designed to produce over 700 tons of pipes annually, was being used less and less each year. For example, while the plant produced 102 tons of pipes in 2011, production plummeted to 33 tons in 2013. Meanwhile, the plant's net income was only UAH 337 million in 2013, while its losses exceeded UAH 240 million. Last year, the plant produced only 32 tons of pipes, also failing to break even. As a result, its debt to creditors at the beginning of last year exceeded UAH 1 billion.
Sergey Taruta's company has not yet commented on the bankruptcy proceedings. However, according to DS, the plant effectively became insolvent back in 2013, and large-scale layoffs began. In total, approximately 900 people, or almost a third of the workforce, were laid off. The company is effectively unable to compete either within Ukraine (with Viktor Pinchuk's Nizhnedniprovsk Pipe Plant) or in EU markets (primarily with Chinese suppliers). This has led to its financial problems, which have intensified efforts by creditors. In addition to Radical Bank, Raiffeisen Bank Aval, to which the Dnipropetrovsk Pipe Plant owes approximately $5 million, has been attempting to collect debts from Taruta's troubled asset since last year.
Finally, the Dnepropetrovsk Iron and Steel Works named after Dzerzhinsky, which has been one of the main suppliers of pipe blanks to the Dnipropetrovsk plant in recent years, may establish itself as the pipe company's primary creditor. This plant is owned by the Industrial Union of Donbass corporation, whose board chairman, Serhiy Taruta, held until his appointment as governor of the Donetsk region last year. Formally, he remains a co-owner of ISD (his 20% stake in the corporation was seized in 2014 following a lawsuit filed by Russian bank VTB), but, by his own admission, he has no influence over the corporation's operations. According to DS sources, control over the corporation lies with a group from Russia's Vnesheconombank.
Therefore, it's quite possible that during the pipe plant's bankruptcy, its creditors' committee could be formed by entities affiliated with ISD. This would ultimately result in them taking over the company's debts.
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