Shoemaker's mistake: how the founder of Carlo Pazolini found himself in debt

London's High Court decided to sentence the founder of a shoe network Carlo Pazolini, Ilya Reznik, for 1.5 years in Pentonville prison for "contempt of court". How did the Russian businessman come to the verge of bankruptcy?
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Two years ago, we wrote about Ilya Resnik success stories: still, the first owner of the Russian shoe networks to discover America. "I do not care what competitors are doing, - said Reznik, the beneficiary group Carlo Pazolini companies, the magazine" The secret of the firm. " - This is all based on my experience. " Trying to take over the world turned into crippling debt.

Shoe network Carlo Pazolini, Russian brand with an Italian sounding, on the crest of success in 2013, there were 200 stores in Russia and manages about 50 retail outlets in the US and Europe. But after the crisis and the devaluation of the ruble in 2014, the US company's network is closed, and only ten remaining stores in Europe. According to «INFOLine-Analysts' for 2015 sales of the company decreased from 8.5 billion to 7.3 billion rubles, while the share of the Russian market, according to Euromonitor International, -. 1 to 0.9%.

In May, Alfa-Bank appealed to the Moscow Arbitration Court with a claim for recognition Carlo Pazolini bankrupt, and in early August, the hearings in the High Court in London for the arrest of the founder and co-owner of the network Ilya Reznik. The Court held (copy of the decision is at RBC) in absentia to prison conclude ReznikPentonville for a period of 1.5 years for "contempt of court". The defendant, is charged on the debts personal property, did not provide the court with information about their assets for more than $ 10 thousand., As required by a court order to freeze the assets (WFO), adopted by the judge Justice Knowles April 25, 2016, and did not give evidence under oath. The court also ordered Reznik compensate court expenses of Alfa-Bank in the amount of $ 80 thousand "The decision of the High Court acts on the territory of the United Kingdom, -. Says partner of law firm Herbert Smith Freehills Alexei Panich. - Britain may require the extradition Reznik, but if he is in the country of which is in issue will be denied. " Reznik, according to sources of the newspaper "Vedomosti", located in Russia in connection with other litigation.

The court ordered the defendant to the plaintiff's attorney to notify their assets worth more than $ 10 thousand. Under its ownership or fractional ownership, as well as inform their cost, location and other parameters. "The Bank considers the court decision fair and reasonable. Unfortunately, all the priestsheel to settle the conflict out of court so far have failed, "- said the representative of Alfa Bank, stressing that the bank continues to look for opportunities to restructure the debt. In Carlo Pazolini situation with litigation do not comment.

As the most ambitious Russian shoemaker was in such a situation?

Engineer shoemaker

In 1992, 30-year-old engineer automaker factory "Moskvich" Ilya Reznik went into business for the first time: he began to import shoes from Italy. In 1995, imports to add your own retail: the first company store Carlo Pazolini opened. Sami shopping while stand out from competitors: their area is 2-3 times higher than the standard formats of 300-400 square meters. m against the 70-150 square meters. m, and the shoes sold in the segment of "affordable luxury" - at the top of the medium price segment. Two years later, earned in the sale of Italian shoes Reznik money invested in its own production: bought the shoe factories in the village Tuchkovo, Kubinka (Moscow region) and Ukraine.

Own productionRussia has played his hand in the crisis of 1998: in other importers have difficulties because of the rate of growth rates, but he was able to quickly shift to domestic supply. domestic production of shoes began to occupy an increasingly prominent place in Carlo Pazolini sales. In 2000, it accounted for about 70% of sales, Resnick started construction of a factory in Russia. In addition, the entrepreneur was already engaged in exports: while the company sold in bulk about 30 thousand pairs in the United States and the Czech Republic, and planned to increase sales to 50 thousand pairs...

By 2005, at the Carlo Pazolini it was already 46 stores and the company's turnover was $ 65 million. However, the potential of import substitution was exhausted. Due to the cost of production growth in Russia had to be closed. Now Carlo Pazolini all footwear imports from Italy and China.

However, Reznik was a new idea-fix - international expansion. In 2006, the company has a new CEO - Arnold Pasternak. Since 1988, Pasternak lived in America, he worked as technical director in the division of administrative PwC Consulting, which in 2002, IBM bought for $ 4 billion. It is under the direction of Pazernaka Carlo Pazolini network set off to conquer foreign markets.

"This has absolutely nothing to do with my personality, it was a well thought-out, balanced, strategic development plan, Ilya thought about it for a long time", - he told RBC Arnold Pasternak.

By 2007, Resnik opened two stores in Prague. The network has become a point to open in the Baltic countries, Ukraine and Moldova. In 2010, it was a momentous event for the company: Carlo Pazolini store opened in Italy.

In 2011, Resnick and Pasternak went for broke - they began to open stores in the US, putting "tens of millions of dollars." On one only advertising in the US Reznik had to spend about $ 10 million. Total largely due Relations Pasternak for the year were opened 11 stores in New York, Illinois, Michigan and other states. For two or three years, the company planned to build a network in the United States, comparable to Russia. In Russia, by the time the segment of "affordable luxury", which worked Carlo Pazolini, has already been exhausted, says the founder of Esper Group Daria Nuclear.

Competitors believe this strategy wrong. "There is no precedent toa player at the same time held a significant share of the international and national shoe market, - says Andrew Berezhnaya, CEO Ralf Ringer. - Clarks, for example, are extremely strong in its market in the UK, but do not occupy a dominant position in other markets. If it does not work at the global players, I do not understand how Carlo Pazolini planned to build on this strategy. "

Average revenue Carlo Pazolini store in the US was a record compared with other countries - € 1,3 million per year. However, as acknowledged by Pasternak, came this business does not work. "The US expansion was calculated not for a year or even five. It was a long-term strategy, for which Russia was a "safety cushion", - says Pasternak. - Major retailers are working in the US without a profit for decades - Tod's, for example. "

Without a "cushion"

Due to the collapse of the ruble in 2014. "safety cushion" in US network Carlo Pazolini died. At the end of the year Reznik has decided to close all US stores, RBC wrote - to invest in international projects duerate of growth was inappropriate, the businessman explained: "In the US, we had to invest at least another two years to bring a branch on the operating margin."

However, by this time the network has not had time to grow significantly: the number of stores has increased from 11 to 14, and Pasternak left the company for two years. Now headed by manager shoe network "Tervolina". Regarding the closure of the European direction of Carlo Pazolini speech does not go yet, but stores reduced. If in 2013 in Italy, for example, there were 29, according to Esper Group, but now, according to the company website, there are only seven. Close, and three stores in the UK. Now in Europe Carlo Pazolini there are only ten stores: in addition to Italy, there are two in the Czech Republic and one in Greece.

In Ukraine, too, have problems Reznik: closed shops in Rivne, Vinnytsia and Donetsk. On July 7, the Economic Court of Cherkassy region officially started the process of bankruptcy "Carlo Pasolini Trading», which initiated a little-known private entrepreneur Artem Potapov, wrote Ukrainian edition of "Business Capital".

Retreatin overseas markets due to problems with the Russian network. "I think the target audience Carlo Pazolini - it is not those who could actually afford $ 250 for a couple - those buying shoes abroad, and those who would like to jump to that level, and they are in the current crisis suffered the most" - says Andrew Berezhnaya.

Carlo Pazolini actually fell below the market. Over the last year the Russian footwear market grew by 11.3% in the money, but decreased in units of 12%, according to Euromonitor International. Revenue is Carlo Pazolini fell by 16%. Margin, according to RBC sources halved. If in 2013, according to the «INFOLine-Analysts' 200 stores Carlo Pazolini was in Russia, but now, according to the company to the site, there are only 137.

The opening of retail outlets abroad Carlo Pazolini financed through loans. By 2016, the company has ceased to serve them. In the spring fell proceedings - in May filed a lawsuit on bankruptcy of Alfa-Bank, an estimated "Vedomosti", the debt was about $ 50 million and a surety for him personally spoke Reznik. In June, the company filed a lawsuit against the Savings Bank, but eventually sold the debt to Alfa Bank, RBC said a source with anuvnogo market. In July, a claim for 1.5 billion rubles. UniCredit Bank filed. Sberbank and UniCredit Bank did not respond to a request to RBC. Reznik took commodity credits, as is engaged in import, Pasternak knows, the main creditor was the Alfa Bank, "others - outside the statistical error," he said.

"The only mistake Reznik was that he got in touch with Alfa-Bank", - said Pasternak. According to the manager, with another bank would be possible to agree on restructuring. "Alfa-Bank is known for its tough policy: do as agreed, and nothing else. But in life it does not happen ", - says the head of another large shoe Russian network.

Take a loan from Alfa-Bank Reznik could motivate favorable terms: as a rule, the bank offered rate of approximately 1% below the market, however, is asking for the absolute transparency of the company, knows the familiar Reznik.

Shoe monarchy

The problem is not evil creditors, sure, a source close to the leadership of Carlo Pazolini, and in the company's business strategy. "The company in Russia covered the entire niche, which could be closeddiversification or vertical or horizontal did not want to take in Russia, and in America and Europe in fact turned out to have nothing to replicate. And all this has aggravated the crisis, "- he said. According to a source familiar with the management of the company, Carlo Pazolini considered diversification strategy in the Russian market, but the decision has not been taken.

"At some point, the company reaches a size that the owners must somehow a different attitude to the management, to share power, authority, counsel, and not pretend that they do it" - says the source of RBC, close to the leadership Carlo Pazolini. Over the last year the company lost "a lot of people." For example, from her left Dmitry Kondrahin and CEO Mikhail Batkov development director, who came out of "Rosatom" and the succeeding Pasternak. Now the company is managed by Rimma Teplova, previously occupied the position of director of the retail department.

What are the chances Ilya Reznik pay off debt? According to the "profile" of the source magazine, now he has a house in the south of France, the overall squareschadyu 450 sq. m and a private jet Gulfstream G450. According to SPARC, Resnick also owns stakes in several Moscow restaurants, for example, he owns 25% of the restaurant "Glavpittorg" on Bolshaya Lubyanka, and it is a wholly-owned PSA "Arsenal". It is possible that save part of the Russian business entrepreneur still succeed, but to refrain from visiting the UK it will have exactly.