Analytics Publications

On 16 July, the Arbitration Court of the Central District will consider a dispute between Evgeniy Zubitskiy and Viktoria Kazak, which relates to the ownership of Tulachermet-Steel plant. This is about the approval at a general meeting of Steel LLC’s participants, in February 2019, of a transaction for selling one third in Tulachermet-Steel LLC (which owns the plant) to Metallfinance LLC (which is fully owned by Evgeniy Zubitskiy). Mrs Kazak, who has a 24.5% participatory interest in Steel since May 2018 and who has not attended the meeting, is seeking to challenge this decision.

Tulachermet-Steel LLC was set up as a successor of Tulachermet PJSC in 2013 for implementing a project for manufacture of quality carbon steel. In May 2018, the company concluded a special investment contract with the Ministry of Industry and Trade (Minpromtorg) and Tula Region, which contract contemplated the construction of casting and rolling complex and mastering of manufacture of rolled products. The ceremonial opening of the plant took place in the presence of the Prime Minister Dmitry Medvedev in July 2019. RUB 55 billion has been invested in the project. The plant manufactures various types of rolled steel from both ordinary brand steels and machine manufacturing steels.

Two-thirds of participatory interest in Tulachermet-Steel constituted the core asset of Steel LLC. However, a transaction for purchasing by the company of the first one-third participatory interest in the plant was initially terminated by court and one-third participatory interest reverted to Tulachermet. Afterwards, by decision of the meeting of Steel’s participants, the second one-third participatory interest was also sold. Ultimately, both participatory interests have been returned to Metallfinance.

Mrs Kazak considers a decision on approval of the transaction as null and void insisting that Elena Putilova, who voted “for” such decision, is affiliated with Mr Zubitskiy.<…>

Maxim Grigoryev, Partner of VEGAS LEX law firm, notes that the dispute is interesting and important for the practice both due to the “strictly formal and discretionary approaches of courts when settling corporate disputes” and in terms of the “possibility of negating a quorum by means of the abuse of right institution”.

“The actual affiliation of persons is massively applied by courts in bankruptcy cases only because of the creativity and disingenuity of insolvent debtors’ beneficiaries”, - Mr Grigoryev says. However, according to him, this concept may also apply to “corporate disputes, which are remarkably similar to conflicts between debtors and bankruptcy creditors”.

See the full text of the article at https://www.kommersant.ru/doc/4417640