"Mriya" - When Things Go Wrong or What is Going On With Largest Debtor or Ukrainian Agrarian Sector
“UkrAgroConsult” came into possession of official statement, released by Mriya’s Creditors Committee. Since after events of Mriya’s statement of failure to further fulfill company’s obligations to its creditors, we had opportunity to observe official position of Mriya only, we think it is crucial we take a look at position of its creditors. We would like to start the story from the statement, made by majority owner of Mriya – Mr. Guta that in case “restructuring agreements” are not signed by the creditors, company will have to officially announce itself bankrupt.
Going back 4 months, we can observe beginning of negotiations between the company and its creditors. The latter stated that their main goal is preserving the company and its operations, despite uncertain delay in interest payments. First of all, such goal is explained by personal interests of the lenders – in case of company’s bankruptcy there is no guarantee that each creditor will be able to receive their cash back, while company remaining in business would ensure return of cash, even after long period. Second of all, creditors stated that company remaining afloat is crucial not only to its employees, but for agrarian sector of Ukraine as well, given current complex situation. For eventual success debt restructuring, two creditors’ committees were initiated – one committee represented bondholders, another represented banks. Committees also included several legal and financial consulting companies: Cadwalader, Avellum, Latham & Watkins, Arzinger, Rothschild, ICU and FinPoint.
Since August 2014, these committees were making both: official and unofficial restructuring proposals to Mriya owners, each suggesting further business activities of the company. However, despite the statement made by Guta family representative that the company “basically belongs to the creditors”, company’s owners were not keen on proceeding with the negotiations. No efforts was taken on behalf of the owners, to be exact. Creditors openly stated that owners were not willing to constructively cooperate with the committees, constantly deviating from restructuring program, suggested, failing to follow through with the promises made. Finally, we observe the situation, when company’s owners rejected conditions of creditors, instead suggesting to sign their own restructuring plan, which was not even seen by the creditors’ committees.
At the moment, company owners once more failed to elect chief restricting officer (CRO), suggested by the committees, failing to comply with the restructuring agreement. These events are ongoing, despite the fact that company was sued in courts already. As the result, Creditors Committee are asking “all competent bodies in Ukraine and abroad to take measures that would prevent “seizure of any property, assets and funds in unlawful way that would be contrary to the interests of the company and its creditors”. Basically, creditors are asking to prevent money theft and fraud on behalf of company owners.
Entire situation is quite damaging for both: company’s reputation and reputation of Ukrainian business in general. Unfortunately, such situation may be viewed as a precedent, which suggests that there is no reliability in working with Ukrainian business. As a consulting company, operating in Ukrainian agrarian sector, we would like to assure you that this is not the case in majority of cases. We are not aware true reasons behind behavior of Mriya owners: lack of communication, lack of experience or other hidden motives. However, we are certain that there are companies in Ukrainian agriculture that were operating, are operating and will be operating in accordance with the standards they claim in their reports. UkrAgroConsult is always there to help you with your business endeavors in Ukrainian agriculture.