- Keeping records of accounts receivable

The ICAC arbitrators have taken the decision to include Maxi-Group accounts receivable within the Group’s negotiable assets without prior investigation into the accounts’ quality.

This decision contradicts the arrangements between NLМК and N. Maximov, as stated in the Agreement regarding the accomplishment of the legal and financial auditing of the Maxi-Group companies, including for the purposes of proving the quality of their assets. The expert legal and financial due diligence of Maxi-Group, conducted by NLМК and invited outside financial advisers, has revealed a presence of uncollectable (doubtful) receivables amounting to more than RUR10 billion. This indebtedness has been artificially shaped by the companies controlled by N. Maximov and his managers as a mechanism for the appropriation of extended bank credits. This has, in addition, resulted in the misrepresentation of Maxi-Group to its creditors and auditors with respect to the quality of its assets and amount of current liquidity.

Thus, the multi-billion uncollectable receivables associated with N. Maximov have disguised an actual absence of dissipated circulating assets of Maxi-Group and become one of the reasons why Maxi-Group met the bankruptcy test and needed recapitalisation even before the transaction with NLМК.

These facts have been proven by the res judicata decisions of Arbitration courts presented to ICAC and findings of the FBK audit company. After closing the transaction many debtors of Maxi-Group controlled by N. Maximov and former Maxi-Group management have attempted accelerated liquidation and bankruptcy. A decision of the ICAC arbitrators on including the debt receivables into the circulating assets of Maxi-Group without due appraisal of its quality, brings about a substantial and unjustifiable distortion of the Maxi-Group value.

- The consequences of reneging on the representations and warranties pledged by Maximov >>