Urban Group

2018: Bankruptcy

The arbitration court of the Moscow region declared on July 9, 2018 bankrupt five structures of Urban Group of Alexander Dolgin:

• Vash gorod LLC (was engaged in project implementation "The visible city" of 370 thousand sq.m),
• Ivastroy LLC (Laikowo, 1.7 million sq.m),
• Ekokvartal LLC ("Mitino O2", 450 thousand sq.m),
• Haygate LLC (Opalikh of O3, 435 thousand sq.m, and Lesoberezhny, 584 thousand sq.m) and
• Kontinent proyekt LLC ("Solar system-2", 460 thousand sq.m).

Bankruptcy proceedings for a year are opened against all companies. As the applicant in affairs the Fund of protection of the rights of citizens created in the fall of 2017 — participants of shared-equity construction acted.

Urban Group exists since 2003. Alexander Dolgin is considered her main beneficiary. The company was one of the largest builders of Moscow area, but in the spring of 2018 met financial difficulties. In April Rosreestr refused to register the agreements of individual share (AIS) in the Urban Group projects. The absence at department of data on payment by the company of contributions to fund became the reason (there builders deduct 1.2% of cost of each DDU).

In Urban Group current situation was called then "misunderstanding". But then Sberbank withdrew accreditation according to mortgage programs in projects of the builder, and the federal authorities announced that they regain control over situation. It is promised that problem objects of Urban Group will be completed for the budget account of the Russian Federation and means of the Moscow region. The fund of protection of the rights of shareholders submitted claims for bankruptcy of structures of developer on June 9.

In spite of the fact that the decision on bankruptcy of Urban Group was made by the federal authorities, by estimates of the Almaz of Kuchembayev from "Kuchembayev and partners", completion of process will take not less than half a year.

"Introduction of the procedure the guide of the developer will dispute three-four months, three-four more months will be necessary for shareholders for the statement of the new builder in each case" — he says.

Representatives of Urban Group already confirmed plans to appeal against court's decisions. So, at a meeting according to the statement for bankruptcy of Vash gorod LLC the lawyer of the builder specified that the company appeals against failure of Rosreestr on registration of DDU in the project in the Khimki district court. By its calculations, because of this measure the builder could not receive about 800 million rubles from citizens. Rosreestr explained Kommersant that DDU will be registered only after providing necessary information from Fund of protection of the rights of shareholders and in the absence of other legal basis for failure.

The head of legal department of "Amuleks" Nadezhda Makarova considers that chances to carry the case from Urban Group a little: ordered to suspend registration of DDU to Rosreestr in the absence of necessary data the legislation, and the legitimacy of actions of fund will hardly become a consideration subject. However, the partner of law office "Padva and Epstein" Pavel Gerasimov doubts that even the positive decision of the Khimki court will help Urban Group to avoid bankruptcy.

If the company answers signs of bankruptcy, then arguments will not save any more, only financing" — mister Gerasimov says.

Mister Gerasimov considers that bankruptcy of builder — the worst option.

"Sanitation assumes obligation fulfillment in an all-civil order whereas at bankruptcy it is about longer terms and decision making by competitive creditors and the managing director" — he explains.

Almaz Kuchembayev confirms that process of bankruptcy of structures of Urban Group "will be absolutely unprofitable to all categories of shareholders".

By estimates of the analyst of CYAN Alexander Pypin, it is in total about 13.8 thousand shareholders who purchased housing in houses under construction.

"The projects which are at a ditch stage can be contracted because of economic inexpediency, and all others, most likely, will face significant increase in terms of implementation" — mister Kuchembayev explains.

The lawyer of the Moscow regional Bar Lyubov Kiselyova adds that to change of the builder there can be construction value addition.

"In this situation will suggest to pay in addition to the co-investor a difference if terms of the contract it allow" — she explains.

In the most difficult situation, according to lawyers, there will be clients of Urban Group who redeemed commercial and non-residential premises on DDU.

"They can apply for receiving the rights to the real estate only after the end of construction of the house, its input in operation and court's decisions considering the case of bankruptcy, payments of compensation from Fund of protection of the rights of shareholders to such investors are not made" — the senior lawyer of BMS Law Firm Taras Hizhnyak explains.

But shareholders — not the only party which can suffer from bankruptcy of Urban Group. The developer actively raised funds not only individuals, but also legal on which balance there was only large volume unrealized the real estate now.

So, according to Rosreestr, for the end of May, 2018 in pledge Moscow Industrial Bank (Minbank) had 392 apartments in the complexes "Visible City", "Laikowo", "Mitino O2", Opalikh of O3 and "Solar system-2". At Moscow Mortgage Agency is (MIA Bank) — 224 more apartments in Laikowo and "Mitino 02". According to Federal notarial chamber, in pledge at Promsvyazbank four houses with two body and on one body in three houses in "The visible city". Renaissance has 799 apartments in "Mitino O2", Sberbank has 540 apartments in Lesoberezhn.

Minbank explained Kommersant that apartments in the Urban Group projects are a providing on the credit for the amount of 640 million rubles issued to one of contractors of the developer. The bank claims that now this debt is serviced timely and in full. Besides, Minbank locates "a collateral highly liquid security".

According to Rosreestr, pledges to Minbank registered Stroynedvizhimost LLC and Inzhstroytekhnologiya LLC. These companies belong to offshore structures whose phone numbers match similar data of under control Urban Group of Urban-group LLC and Urban-proyektirovaniye LLC. The fact that "Stroynedvizhimost" and Inzhstroytekhnologiya are controlled by beneficiaries of Urban is confirmed by two sources of Kommersant familiar with a situation in the company.

Alexander Pypin doubts that loans will be returned timely. If the credits were issued on market conditions, then the loan of Minbank could make about 1.5 billion rubles, the analyst added. The maximum size of reserves which Minbank in principle can create without violation of standards (if does not reduce assets or shareholders will not render the additional help), is 640 million rubles, the senior director of banking analytical group Fitch Ratings Alexander Danilov counted. This digit precisely matches loan amount to contractors of Urban Group. Thus, if the bank nevertheless has to create on this credit reserves in the amount of 100%, for example upon the demand of the Central Bank, then standards of bank will appear in a critical zone — at minimum allowed level. For other creditors of Urban Group the situation is not so critical.

One more negative effect of bankruptcy of Urban Group using Fund of protection of the rights of shareholders, according to Kuchembayev's Almaz, creation in the market of a precedent of solution of the problem of builders for the budget account can become exclusive.

"It is worth waiting that now with a request to deal with similar problems many regions will act, in particular we will prepare the similar address from shareholders of the Ulyanovsk region" — the lawyer believes.

The CEO of Rating agency of a construction complex Nikolay Alekseenko doubts that such addresses will be satisfied.

"It is logical that the fund is engaged in completion of residential objects only in exceptional cases and according to the decision of the federal government while in most cases a problem of defrauded investors in competence of the regional authorities" — the expert^[1] notes^[1].

Mister Alekseenko emphasizes that the organization simply has no opportunity to complete large volumes of construction: assignments in the amount of 1.2% of cost of DDU for this purpose are not enough.

Notes