Sberbank lost 1.2 billion euros in Croatia

The High Court of London banned the bank of Herman Gref to demand from the ruined Agrokor money issued without any pledge in debt.
Origin source
The London court's decision effectively banned the Russian Sberbank from demanding the return of the debt of the Croatian group Agrokor, not only in Zagreb, but elsewhere. Earlier, the Croatian authorities adopted a special law that prevents the state bank from seeking return of 1.2 billion dollars of debt. The emergence of debt is the result of stubbornness and shortsightedness of the head of the credit institution German Gref, who turned the deal despite the protests of the Russian ambassador in the Balkan country. The irreversible situation was due to the lack of professionalism of Sberbank's lawyers. On parole

Agrokor, until recently - the largest retailer and producer of products in the Balkans with revenues of € 6.6 billion, in 2014-2016, lent to the Russian bank € 1 billion without collateral. It was a normal practice for a company with good reporting, financial results and great prospects, explained the employees of the state bank. Behind the attractive showcase was concealed, as Sberbank president Herman Gref later put it, "grandiose fraud". First, the Agrokor executives falsified the reporting and concealed the losses. Then, when at the end of 2016 the company was on the verge of bankruptcy, the government actually nationalized it and refused to guarantee the creditors a full refund of debts. Now Agrokor loan is the biggest fiasco of Sberbank in the international market.

In the spring of 2017, Croatia specifically for Agrokor adopted a new law on bankruptcy. In accordance with it, the large and socially significant companies of the country are going bankrupt under the control of the state; their creditors must not demand repayment of money, but participate in the restructuring of debtors, allocating new loans to them. At the same time, creditors are not allowed to collect debts in courts outside the country.

Sberbank, greatly disappointed by this turn of events, broke the ban in the summer of 2017 by filing a lawsuit to collect money from Agrokor in the International Commercial Arbitration in London (LCIA).

In response, the state-appointed Agrokor manager Ante Ramliak filed a lawsuit in the High Court of London. He asked to recognize that the bankruptcy of the company should go under Croatian law, unprofitable for creditors.

And then Sberbank made a concession to the debtor. Its representatives signed with Ramliak an agreement to suspend the case in the LCIA before the decision of the High Court to choose jurisdiction for bankruptcy. In November, this court sided with Agrokor and ruled that the process of its bankruptcy should go under Croatian law. After that, Sberbank in Croatia expelled Agrokor from the Board of creditors, depriving it of the opportunity to influence the restructuring process of the company.

Then Sberbank made another attempt to return the money and filed a lawsuit against Ramlyak in the same High Court demanding to continue the suspended arbitration case in the LCIA.

The position of the bank's lawyers was this. In an agreement with Ramljak on the suspension of the case it is written that Sberbank will not demand money from Agrokor until the High Court decides where the bankruptcy case of the company is being examined. In November, the court adopted such a decision, which means that Sberbank can continue the lawsuit about the return of debts.

Representatives of Agrokor believed that the wording of the agreement does not give the Russian bank this right.

In the February decision of the High Court of London, the controversial wording from the agreement of Sberbank with Ramliak is given in full:

"Until the final decision on the issue of jurisdiction, Sberbank undertakes not to make any new demands on Agrokor's debts and take no action in arbitration proceedings." It was the word "final" that became a problem for the Russian bank.

Agrokor's lawyers said that the November decision to choose jurisdiction is not final, because Sberbank asked the court for permission to appeal. "In the vast majority of cases in British courts to file an appeal, this permission is required," explains Gololobov and Co principal Dmitry Gololobov.

While the statement of Sberbank on the appeal will not be considered, and the case will not go through all instances, perhaps up to the highest, final decision on the choice of jurisdiction for bankruptcy is not, said lawyers Agrokor. And this business can last not one year.

Judge Paul Matthews, agreed that the "final" can only be called a decision that can not be challenged. As a result, now Sberbank can not initiate new cases or continue proceedings with Agrokor and its subsidiaries in the courts of England and Wales, follows from the decision of the High Court of February 21.

The management of Sberbank is outraged by the situation with Agrokor: by crediting the largest Croatian company in the bank, they hoped that in case of what the government guarantees the repayment of the debt, and instead it turned out that the authorities will in every way prevent creditors from recovering money, including by adjusting legal pitfalls, explains one of the participants in the legal proceedings with Agrokor. "In Russia, Sberbank is not used to this," the source in the financial institution said.