“Jamilko” is not given as a pledge – Newspaper Kommersant No. 61 (7506) dated 04/10/2023

The distributor of Western brands “Jamilko” had problems with registration of collateral for loans for 1.85 billion rubles, received a year and a half ago from OTP-Bank. Rosreestr refused to register a mortgage agreement in favor of the lender. The court did not uphold the company, since its beneficiary is an offshore company from Cyprus, an unfriendly country whose residents are prohibited from dealing with Russian real estate. Lawyers, expecting an increase in the number of such proceedings, believe that the agreement can be approved in the government commission for foreign investment control.

Kommersant learned about Jamilko’s problems with pledging real estate to OTP-Bank from the materials of the Court of Appeal, where the retailer challenged Rosreestr’s inaction on registering the contract. They say that in June 2021, the bank issued two loans for €10.7 million and $12.7 million (in total, about 1.85 billion rubles at the then Central Bank exchange rate). The purpose of the loan and the object of the pledge are not specified.

In SPARK-Interfax, the list of the retailer’s assets includes only real estate in Stoleshnikov Lane in the center of Moscow, but it is already under mortgage. Kommersant’s source says that OTP-Bank credited Jamilko for the purchase of goods. Typically, banks issue funds to retailers secured by future earnings, sometimes for real estate, the interlocutor of Kommersant explains. Jamilko and OTP Bank did not respond to Kommersant’s requests.

The parties sent the pledge agreement for registration to Rosreestr twice, but were refused. The court recognized the actions of the department as legal, because Jamilko belongs to Losford Trading from Cyprus, which was included a year ago by the Russian authorities, along with other EU countries, on the list of unfriendly due to military operations in Ukraine. Residents of these countries are prohibited from any real estate transactions in the Russian Federation.

Jamilko provided evidence of the ultimate ownership of the offshore by a citizen of the Russian Federation, but the court “considered them insufficient.” The court did not indicate that the Hungarian OTP Bank was from an unfriendly country, since Hungary was included in this list only at the end of March. For the court, the proof of the ultimate ownership of the offshore is information from the tax service, explains Orchards partner Yuri Aksenov. If the court considered the information insufficient, then perhaps the ultimate beneficiary did not fully disclose the ownership structure to the tax authorities, the expert believes. In such cases, it is important for the court that the citizens of the Russian Federation have control, adds Kira Vinokurova, special adviser on sanctions issues at Pen & Paper.

The second argument of the court was that the loans were issued in euros and dollars, which is prohibited by the instructions of the Central Bank of the Russian Federation. Such a loan, as well as the transfer of an asset by a Cypriot company to the Russian Federation as a pledge, must be approved by the commission for the control of foreign investment, which was not done. OTP-Bank approved financing for Jamilco prior to the start of the military conflict, which led to changes in the legislation, but the loan agreement is considered valid after the registration of the pledge agreement. Therefore, the retailer has one way out – to obtain permission from the government commission, Kira Vinokurova believes. According to her forecasts, the situation with Jamilco may not be the only one and “soon a series of similar litigations is possible.”

According to a Kommersant source familiar with the work of the government commission, “several tens of thousands of requests” for transactions have been accumulated there from non-residents from unfriendly countries, but about ten permits are issued per month, mainly for applicants from strategic sectors. Therefore, he believes, applications from companies from other segments are not considered as a priority, which increases the time for them to coordinate transactions at least up to six months.

Khalil Aminov