The meat Group “Prodo" that owes Alfa-bank 3.5 billion rubles would most likely have repeated the unenviable fate of other debtors of 'Alfa', if not the managing director of Millhouse Capital and the right-hand man of Roman Abramovich, David Davidovich. In 2004 the business of the group "Prodo” which had been founded by former executives of Sibneft - moved under his control. On October 21, 2008 Alfa Bank filed its first lawsuit for 200 million rubles to several companies of "Food and Agriculture" at a time: trading company “Prodo Distribution", "Omsk Bacon”, to the Omsk and Klin meat processing plant. Soon ‘Alfa” just plied "Prodo" with claims: by March 2009 there were 13 claims recorded from Alfa Bank for 3.5 billion rubles in the Moscow Arbitration. Everything went according to the usual scenario: the court decision was expected in order to receive an enforcement order and have a debt returned in the form of ready cash or property of the debtor, in extreme cases – in the form of its bankruptcy. But the lawyers of the “Prodo" rewrote the script in their own way.
First they tried to deprive the status of Alfa-Bank as largest lender of the meat group. And ‘Prodo" began overgrowing rapidly with loans of the friendly companies; the amount of money issued by them was several times higher than the debt to Alfa-Bank.
In addition, “Prodo” actively stepped up its internal loans. On 30 October 2008, the parent company of the group issued to "Prodo Distribution" an interest-free loan of 732.94 million rubles with the redemption by February 28, 2009. In fact, most of the claims by Alfa Bank and other banks were filed against "Prodo Distribution”. Securities for "Prodo" loans were defendants in suits of Alfa Bank - Klinsky Meat-Processing Plant, "Omsk Bacon” and several other key businesses of the group. On December 23, 2008 "Prodo" took from its own beneficiary – the offshore Nevern Overseas - more than 1 billion rubles which were to be returned after 10 years, and under a joint guarantee of 30 companies affiliated with the meat group; and a week later Nevern Overseas and "Prodo” signed an additional agreement that the beneficiary could demand early repayment of money, in case “Prodo" satisfied the requirements of more than 300 million rubles in respect of any of the 31 companies. That is, the majority of claims by Alfa Bank.
By autumn of the last year, the companies of the group "Prodo" owed each other for more than 13 billion rubles, so the company was ready to any turn of events, like the banks’ attempts to bankrupt any of them.
Another method used by “Prodo» - lawyers attempted to stretch the process of litigation as long as possible. In fact, Alfa-Bank spent three months to win the first two claims of 320 million rubles in the first instance; besides, a month was spent to choose arbitration assessors.
Another method was keeping the key assets, i.e. burdening them with debts to suppliers. As it became clear from the materials by the Arbitration Court of the Moscow region, all producers of "Prodo" had delivered deli meats to the trading company “Prodo Distribution", which simply stopped returning money in autumn 2008.
While the proceedings with the creditor banks dragged on, "Prodo" managed to get a court decision on its own claims and to protect its key assets from the creditors: Klinsky Meat-Processing Plant, poultry farms and meat business in Omsk. All claims of the companies against each other were considered by the Arbitration Court in the Moscow region. Unlike the trials with the creditor banks in Moscow and Omsk - the court cases within the group "Prodo" had been resolved in the Moscow court in 1.5-2 months only, and the defendants had consistently reported to the court on their complete consent with the claim and the amount of debt, but they did not have the money for the payment.
To protect the key assets from the claims of "Alfa" and other creditor banks, lawyers of “Prodo” made part of the meat holding property arrested. They managed to do so with the help of the claim by Klinsky Meat-Processing Plant, according to which 1.3 billion rubles on the accounts of "Prodo Distribution", and from the assets of “Prodo” were seized. The court decision states: "The arrested property under security measures can not be transferred to third parties, including banks.”
The carelessness of judges played into the hands of “Prodo” . Every time opponents to the meat holding made small judicial mistakes that helped it to postpone the moment of reckoning for the debts and force the banks to restructure.
In August 2009 the lid of Alfa-Bank came off. "We think we have almost got to the end of any chance to agree, so we decided to initiate bankruptcy", the then deputy president of the bank Vladimir Tatarchuk declared. Claims for bankruptcy have been filed to "Prodo”, Klin and Omsk Meat-processing plant and “Omsk bacon”. But “Prodo "was ready for such a turn of events. A week after the claims of bankruptcy by "Omsk Bacon" in the amount of 350 million rubles filed by Alfa-Bank, the meat group itself joined the bankruptcy: the same action but for 449 million rubles only was filed by the Perm poultry farm. There was no doubt that "Prodo" was able to claim any necessary amount of debt while having on hand judgments of 13 billion rubles.
Lenders had no choice but to solicit a truce. And then in late December, Alfa Bank and ‘Prodo” announced that the conflict was settled: the company signed an agreement to restructure the debt.
Source: Vedomosti № 55 (2573) on 30/03/2010