MOSCOW, February 1 (RAPSI) – The Eleventh Commercial Court of Appeals in the city of Samara has dismissed an appeal filed by PJSC Togliattiazot (TOAZ) against determination of the regional commercial court dismissing its claim to bankrupt OOO Tomet, the court has informed RAPSI. 

The court of appeals affirmed that the enterprise was not a legitimate claimant in the Tomet bankruptcy case; moreover, the court confirmed the Uralchem’s powers as a recoverer of the damages suffered by Togliattiazot, and recognized that its claims to Tomet in the amount of 77.3 billion rubles (about $1 billion at the current exchange rate) in favor of Togliattiazot and 10.3 billion rubles ($135 million) in favor of Uralchem itself were lawful. 

Thus, Vladimir Makhlai and Sergey Makhlai, beneficiary TOAZ owners, failed to challenge the introduction of the observation procedure at Tomet and cancel the appointment of Anatoly Selishchev as its bankruptcy commissioner. By March 1, 2021, Selishchev is to complete an internal audit at Tomet and prepare a report on the financial standing of that enterprise. 

The majority shareholders of PJSC Togliattiazot are obliged to reimburse these amounts of damage in accordance with the verdict of the Komsomolsky District Court of Togliatti dated July 7, 2019. It should be reminded that this court found the Makhlais and their foreign partners in absentia guilty in a criminal case over a large scale fraud (Article 159.4 of the Criminal Code of the Russian Federation) committed by the way of embezzlement of TOAZ products in 2008 through 2011. Tomet was a defendant in this criminal case. 

In accordance with rulings of Moscow’s Basmanny District Court of April 21, 2017, and Togliatti’s Komsomolsky District Court of February 27, 2013, an attachment still in force was imposed on the Tomet fixed assets, its plot of land designated for the expansion of its core production facilities. On September 15, Tomet was prohibited to carry out any registration procedures as to disposal of its vehicles by an enforcement officer’s freezing order. 

According to investigators, Tomet is controlled by Hong Kong-based offshore Triumph Development owned by the Makhlais Swiss partner Andreas Zivy (in July 2019 he was found guilty in absentia of large scale fraud by a judgment of the Komsomolsky District Court of the city of Togliatti). 

Several years ago TOAZ in violation of the law and at rock-bottom price was stripped of its most valuable assets, ammonia unit No. 7 and two methanol units. The essence of the scheme was that the equipment itself remained in the territory of TOAZ, the enterprise continued to bear the costs associated with repairs, servicing, and supply of raw materials of the equipment transferred to Tomet, but only major owners of TOAZ, the Makhlais and Zivy, profited from it. 

Formally, Tomet became one of the top five producers of methanol in Russia, although this company was not present on the market, since transactions were made with TOAZ products. At present, the circumstances of how TOAZ assets were transferred to Tomet are investigated in the framework of a criminal case under Article 210 of the Criminal Code of the Russian Federation, that is, the establishment of a criminal society or participation therein. The suspects in the case are the Makhlais, Zivy, and other persons affiliated with TOAZ, totally more than 10 individuals.  

The Makhlais have time and again demonstrated their intentions not to comply with the court judgement adverse to them. As noted by lawyers monitoring the process, about a year ago the Makhlais decided to bankrupt Tomet under their own supervision planning to recompense TOAZ damages in a way, which would permit them to keep their money and multibillion assets of Tomet stolen from TOAZ. 

For these purposes, in early 2020 Tomet stopped paying TOAZ for the services provided and intentionally accumulating the respective debt. Moreover, lawyers say, the Makhlais began to increase Tomet creditor indebtedness via their Togliattikhimbank and RTS bank; the indebtedness grew rapidly and soon made over 1.5 billion rubles ($19,7 million).

By the autumn of 2020, the Makhlais could drive a profit-making enterprise with reasonably good commercial viability (as the costs were borne by TOAZ) to a pre-bankruptcy state. So, last September TOAZ turned to courts seeking declaration of Tomet bankruptcy. Its CEO Vladimir Chabrov stopped production and ceased to pay wages and salaries. 

A week later after TOAZ had filed its claim, Uralkhem was forced to make its own move seeking bankruptcy of Tomet so to prevent the disappearance of Tomet assets and funds in new offshores of the Makhlais and undertaking, as prescribed by the court, to recover the 77 billion rubles ($1 billion) damages in favor of Togliattiazot. 

On November 25, 2020, the commercial court examined both petitions. Against the will of the Makhlais, TOAZ was ruled not to be a legitimate claimant, since TOAZ representatives had denied that the enterprise suffered any damages and did not admit it was necessary to recompense them during the trial in the fraud case.  

Lawyers believe that the Togliattiazot management acted in bad faith when submitting the petition seeking to recognize bankruptcy of the debtor and basing their demands on the final judgement, which, in turn, is challenged by the same Togliattiazot. The management pursues the only aim – to prevent the satisfaction of the creditor’s claims, even those submitted by Togliattiazot itself. The actions of Togliattiazot cannot be seen as reasonable and in good faith, since the contradiction between the position it takes with respect to the civil claim in the framework of the criminal case and in the framework of the bankruptcy case results in impossibility to act as a processual claimant in the Tomet bankruptcy case, since the lack of interest on its part in complying with the court ruling and the fact that it gave up its demands in favor of Togliattiazot in the framework of the court hearings on the civil claim clearly indicate that Togliattiazot acted in abuse of law when petitioning about bankruptcy of its affiliated person. 

The claim of Uralchem was granted, the observation procedure was introduced at Tomet, Anatoly Selishchev became the bankruptcy commissioner. For Tomet, these judgments meant the return to the business as usual situation. 

According to Dmitry Tatyanin, the Chief Legal Officer of Uralchem, “the company is interested in stable operation of Tomet.” “The introduction of the observation procedure in the framework of the current legislation is a necessary and efficient measure aimed at the rehabilitation of the debtor enterprise. There will be released blocked earlier settlement accounts of the company, what will permit Tomet company to continue its proper production and financial operations, meet its commitments vis-à-vis its Russian and foreign partners, pay wages and salaries, and meet its social commitments. We hope that the bankruptcy commissioner will be able to bring under his control the situation at Tomet, prevent unreasonable expenditures and withdrawal of the enterprise assets. 

Nevertheless, a series of suspicious industrial accidents putting out of operation both methanol units, which took place last December, made Tomet employees and mass media outlets to allege a planned sabotage attack on the part of the Makhlais. It could be aimed to undermine court judgements on the recovery of damages suffered by TOAZ from Tomet. According to lawyers, the decision of the Eleventh Commercial Court of Appeals thwarts attempts to conceal one crime behind others. 

Earlier, Uralchem stated that it is not interested in the suspension of production and the bankruptcy of Tomet. In order to counteract such developments and to ensure stable operation of the debtor enterprise, in October of 2020 the company developed constructive proposals aimed to resolve the situation and as soon as possible to solve the problem created by the management and owners of Togliattiazot and Tomet. At present, as experts observe, Tomet for the first time in its history has the opportunity to operate in the healthy environment without control of Russian and foreign criminal elements.