Former Parex owner petitions for Reverta bankruptcy

Take note – story published 9 years ago

One of the primary former shareholders of Parex Bank, Viktors Krasovickis, has submitted to the Riga Northern District Court a petition to declare insolvent the ‘bad asset’ recovery firm Reverta, spun off in 2010 in the aftermath of the state bail-out of the teetering commercial bank two years prior.

Reverta communications and marketing director Marita Ozoliņa told national information agency LETA Friday that such a request is “absurd and without any justification”, adding that the financial solutions agency created to handle the leftovers of the Parex fiasco is prepared to counter the claim and prove its wrongfulness.

“Remember that any untruths presented during the course of a bankruptcy declaration request bring criminal liabilities,” Ozoliņa said.

Judge Didzis Melbārdis is set to hear the case and may issue a ruling on November 26.

Former Parex owners Krasovickis and Valērijs Kargins have been in court against Reverta on repeated occasions, including to face a joint claim by Reverta and the Privatization Agency (PA) to recover €141.6m from them. The sum is comprised of €17m in losses to the PA, €117.7m in losses caused to Parex and €6.4m in contractual fines.

According to the bailout contract that allowed the commercial bank to be rescued from the brink of a spectacular failure, Reverta and the PA claim Kargins and Krasovickis are liable for presenting false information to financial regulators at the time of its shut-down.

In fact the losses are estimated to have been undervalued by at least €116.7m, according to audits by financial experts at PricewaterhouseCoopers and legal experts at law firm Eversheds Bitāns. Altogether the amount of claims against the former Parex shareholders exceeds €233.3m.

As of July 1, changes to legislation meant Reverta would no longer have to keep paying out millions of euros a year to the former owners of Parex who guided the bank to its spectacular collapse via so-called "sub-debts" - essentially loans the owners had issued to themselves. 

According to Reverta's figures, the amendments will save more than €4m a year in interest payments as well as subordinated obligations worth €75m until the state money used in the bailout has been repaid in full.

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