Court declares transaction between Vidmantas Kučinskas, owner of Arvi, and his son invalid and upholds civil claim of Alfa Bank

Sorainen represented international bank Alfa Bank in a dispute over loans personally granted by Vidmantas Kučinskas to Arvi NKP, which operates a fertilizer factory in Kaliningrad.

Alfa Bank lent over EUR 10 million to Arvi NKP, according to contracts made in 2012-2014. In 2015 one of the Arvi group companies faced financial problems and Vidmantas Kučinskas agreed to provide an additional guarantee to the bank. The Lithuanian businessman took personal responsibility for fulfilling Arvi NKP’s obligations towards the bank.

However, Arvi NKP and Vidmantas Kučinskas did not fulfil their obligations. As a result, Alfa Bank brought an action in the Moscow Meschansk Court on 9 June 2016 and in The London Court of International Arbitration on 20 September 2016.

The Moscow Meschansk Court fully upheld Alfa Bank’s action and the court’s decision came into force on 26 January 2017. At the same time Vilnius Regional Court ordered seizure of Vidmantas Kučinskas’ assets worth over EUR 14 million, a decision based on the ongoing process in the London Court of International Arbitration.

It was revealed that the businessman, considered to be one of the richest individuals in Lithuania, might possibly not have assets of such value. Just one day after the decision by the Moscow Court, the majority shareholding in Vyrja, which controls companies in the Arvi group, was transferred to Vidmantas  Kučinskas’ son, Justas. Alfa Bank sought to challenge the transfer of Vidmantas Kučinskas’ shares to his son and brought an action before the Kaunas Regional Court, which arrested all the shares that had been transferred to Justas Kučinskas and ordered him not to dispose of the shares or exercise privileges associated with the shares.

On 9 June, Kaunas Regional Court upheld Alfa Bank’s civil claim and declared that the transaction by which Vidmantas Kučinskas gifted shares in Vyrja to his son was invalid. The court found that Vidmantas Kučinskas had acted in bad faith in respect of the creditor, Alfa Bank.

Sorainen advised Alfa Bank on all aspects of the legal proceedings. The Sorainen team included partner Kęstutis Švirinas, senior associate Jonas Sakalauskas, with associate Vita Sabalytė. The client was represented in court by senior associate Laurynas Lukošiūnas.