OREANDA-NEWS. December 11, 2009. The 19th Court of Appeal (Voronezh) upheld the judgment of the Lipetsk Arbitration Court on debt recovery from OJSC GAZ and Managing Company GAZ Group for the benefit of NLMK.  The appeal case was tried with reference to GAZ’s appeal against the Lipetsk Arbitration Court’s judgment passed on September 3.

As a reference: since October 2008 GAZ Group has not paid NLMK for steel products delivered in full as per signed contracts and processed by the GAZ Group companies.  The overdue debt amounts to RUR 1,161,831,794, including fines and penalties. 

Until April 2009 NLMK, being aware of the current crisis, tried to settle this problem out of court.  When these attempts proved futile, the Company had to take a legal action in order to recover the overdue debt along with fines and penalties as per supply and surety agreements.

Over the course of the sessions at the Arbitration Court of the Lipetsk region, GAZ Group used the practice of case delaying and setting up counterclaims to contest contractual liabilities or extend the term of delivering the judgment on debt recovery.  Thus, motions on case referral to another arbitration court were made, arguments on lack of due contract approval within GAZ Group were put forward, counterclaims related to storage and assignment agreements were lodged and applications from individual shareholders of GAZ Group were filed claiming infringement of their rights. Moreover, blatantly fabricated documents were submitted, though they were removed from case evidence by GAZ Group itself after it had been accused of fabrication.

As a result the Arbitration Court of the Lipetsk region ruled that RUR1.089 billion of debt and RUR73.8 million of fines are to be recovered jointly and severally from Managing Company GAZ Group and from OJSC GAZ for repayment of overdue debt related to 38.8 thousand tons of steel products supplied by NLMK to GAZ Group under contracts signed in 2008. OJSC GAZ and LLC Managing Company GAZ Group filed appeals against this court judgment.  The companies of the GAZ Group again tried to contest the legitimacy of the supply contract and liabilities of OJSC GAZ thereunder, despite the fact that all steel products had already been used in their manufacturing process. On December 9, the Court of Appeal upheld the judgment of the Lipetsk Arbitration Court on debt recovery from OJSC GAZ and Managing Company GAZ Group for the benefit of NLMK, confirming its legality.