Moscow offices of two international legal firms, Herbert Smith LLP and Latham & Watkins LLP, have received a letter from non-commercial partnership for protection of the rights of co-investors in Fort Kutuzov residential development project, Russian business news TV channel RBK daily reports. Fort Kutuzov co-investors asks legal firms to stop assisting bankrupt billionaire Sergei Polonsky's Avanta OOO in negotiations over debt restructuring of NAZVANIE.NET company (former Mirax Group).
In 2005 Avanta OOO struck a deal with FCSR Closed JSC, under which Avanta invested into FCSR residential development project called Fort Kutuzov in Moscow in exchange for the housing premises when the development is completed. In 2010 FCSR terminated the deal, says chairman of FCSR Petr Ivanov.
Co-investors believe that Avanta can not act as a guarantor of the debt of NAZVANIE.NET because «the company owes over 5.7 billion roubles (142.5 million euros) to private investors who made pre-payments for their flats». In their view, the lawyers devises a «legal framework» to make Avanta unliable for its debt obligations.
«Contact Mirax Group for comments», RBK daily was told by Herbert Smith CIS LLP. Later on Herbert Smith said they had not received the letter.
Latham&Watkins were unavailable for comments. Asked by RBK daily correspondent, the secretary refused to put him through to a person in charge.
Dmitry Uchitel, chairman of the partnership for protection of the rights of co-investors in Fort Kutuzov, told RBK daily that the letter had been sent first-class and the copy of it was available on the internet. «If they say they haven't received it, they are stretching the truth,» Uchitel said.
«If facts of unethical conduct come throught, the firms are likely to face expulsion from the International Bar Association at most. Membership in the IBA gives status to the firm. They can spoil their reputation and lose clients. But it will happen if the case receives publicity and not here, but in London», said Yuri Nikolayev, head of Moscow's Nikolayev and Partners firm.
The copies have been sent to the Prosecutor General's offices and the IBA in order to see whether the actions of the foreign law firms are honest.