Russian cosmetics retailer could face bankruptcy

By Katie Bird

- Last updated on GMT

Related tags Debt

Russian cosmetics chain Arbat Prestige could face bankruptcy as a number of creditors are calling in debts, according to press reports.

Claims from creditors recalling their loans from the company have escalated since January of this year, when the company director Vladimir Nekrasov was arrested on suspicion of tax evasion.

Nekrasov is believed to owe approximately 50m rubles (€1.4m) in outstanding tax payments. A further arrest occurred in February of Semion Mogilevich, who has been accused of criminal activities by both the FBI and the Russian authorities and is under suspicion of masterminding the tax evasion scheme.

‘Friendly’ creditor calls in debt

Capital Estate, a previous guarantor of an Arbat and Co. bonded loan, is now calling that the court recognises a debt of 1.59bn rubles (€44.1m).

According to the Russian daily paper Kommersant, other creditors have previously filed a total of 19 claims with Moscow’s arbitration court totalling 950m rubles.

This latest development has led to rumours that Arbat may soon file for bankruptcy, as having a friendly creditor can help maintain a level of control over the proceedings.

However, Nekrasov’s lawyer Dobrovinsky has denied rumours of bankruptcy, according to the reports.

Store closures

In April the company, which currently runs over 60 retail outlets in Russia, announced it was closing a number of stores in St Petersburg.

These announcements, along with reports that one of the company’s major suppliers was pulling out, fuelled rumours that Arbat may not survive the arrest of its managing director.

At the time, the company claimed the closures were part of a streamlining process that had already been planned before the arrest of Nekrasov, adding that the opening of new stores is planned for other regions.

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