Russian bank files $22m lawsuit vs Armavia - paper
VTB Russia has filed a lawsuit against Armenia’s national air carrier in an attempt to return a sum of $22 million which it had allocated to the company for loan refinancing purposes, the Russian Izvestia reports, citing sources close to the bank.
Armavia’s owner, Mikhail Baghdasarov, later confirmed the report in comments to the paper.
The proceeding against Armavia (for $ 10 million) has been reportedly lodged with the Armenian State Arbitration Court. Mika Limited, another company owned by Baghdasarov, is going to face a proceeding over $12 million at the Royal Court of New Jersey.
The Russian publication says the bank’s Armenian branch had allocated over $7 million to Armavia with the purpose of refinancing a loan the company had received from Ardshininvestbank for purchasing a Superjet-100 airliner.
“A source at the Russian Ministry of Industry and Trade says there was a personal factor pushing Armavia to be the first purchaser the Superjet-100. Russia’s United Aircraft Corporation is a state holding headed by Mikhail Poghosyan, an ethnic Armenian [the airliner belongs to the Russian ministry],” a source at the company was quoted as saying.
It has stressed the importance of finding a more solvent client, adding that Armavia cancelled the purchase of a Superjet aircraft in 2012. It further refers to a statement issued later in the year, in which the Armavia owner unveiled his intention of selling the company, citing financial difficulties as a reason.
“Besides, the VTB Yerevan branch lent $8 million to Mika Limited, with Armavia acting as a loan guarantor. The money was due back in 2012, but neither Armavia nor Mika Limited made the payment. At the end of last year, the right to demand the money was transferred to VTB Russia,” says the Russian paper.
As of January 18, Mika Limited had a debt of $12 million to the bank. Armavia’s debt was $10 million, Izvestia says, adding that the negotiations between the parties yielded absolutely no result.
Baghdasarov told the paper that they are going to pay off the loans and recall the lawsuits in the near future.
But Russian lawyers believe VTB has high chances to win Armavia.
“Considering the character of the court dispute, the appeal is likely to be satisfied. It’s another matter if the sums will be returned after the passage of a ruling. In case Armavia fails to pay back the money at the end of the trial, VTB will submit claims for the company’s assets. If the Armavia airliners were purchased under a license contract, VTB can obtain the right to the license contract to be able to sell them at an auction later. But the bank will face serious problems in case the air company is declared bankrupt. Armavia in that case will be included in a loan register allowing it to seek a payback in the amount of 20% of the debt,” a specialist at a Russian law firm has told the paper.
As for the New Jersey trial, the lawyer said it is doomed to failure. “It is unpromising. That will actually entail quite a lot of costs for flights and lawyers. The proceeding can be delayed given that the respondent may not show up at the hearing etc,” said the lawyer.
The paper further refers to the Armavia aircrafts, noting that the company has two A320, three Bombardier CRJ-200 and three Boeing 737-55S airliners. The Avia.ru editor-in-chief, Roman Gusarov has said Armavia’s air park has no value at all, with all the aircrafts having been purchased under a lease agreement. He added that Russian investors have been recently interested in Armavia, estimating its cost at $55 million.
“Armavia may in the meantime find itself in the state’s hands. Head of Armenia’s General Aviation Department Artem Movsisyan said on February 6, 2013 that Armenia is concerned about the situation with Armavia. But he did not rule out the possibility that the company’s shares may be handed over to other people, including the state,” the Russian paper says in conclusion .
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