Real Estate Investment blog

Metropolis City S.R.L. legal case overview – Kirsan

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In this blog article, you can find the details (together with hyperlinks to court documents) of the legal process in Moldova, related to the recovery process against the borrower Metropolis City S.R.L., with 3 projects involved in the Chisinau Metropolis district:

ProjectProject startPlanned lengthCollaterals
Metropolis 4DJun. 202012 monthsCadastral nr. 0100119.459.01.001-0100119.459.01.083 (43 apartments)
Metropolis 4ANov. 202012 monthsCadastral nr. 0100119.448.01.001 in sequence to 0100119.448.01.061 (36 apartments)
Metropolis Business ApartmentsFeb. 202112 monthsCadastral nr. 0100119465.01.021-0100119465.01.060 and 0100119465.01.101-0100119465.01.140 (80 apartments)

Metropolis City SRL accelerated restructuring

Administrator: Gîrleanu Natalia

Judge: Pădurari Valeriu

“Metropolis City” had its headquarters in the municipality of Chisinau, bld. Dacia 59. in the newly built office building in the Metropolis district area which it was developing. In March of 2023, the Metropolis City S.R.L. changed its legal headquarters to Balti municipality, St. Nicolae 112 (address of a former school). This change seemed odd, as it was inexplicable why a company that is working on development and construction of several buildings in Metropolis district, Chisinau needs to change headquarters to the municipality of Balti – 140km and 2 hours away from the center of it’s activity. The situation became clear when on the portal of the courts and in the Official Gazette of the Moldova Republic, the following Court Decision appeared:

  • Bălți Court, Central headquarters no. 2i-12/2023 of May 15, 2023 – accelerated restructuring procedure of SRL “Metropolis City”.

From this document you can see, that on 9 March 2023 (the next day after the change of address) Metropolis City SRL applied for the accelerated debt restructuring process in the local court of that small city. Debt restructuring is the process, where the company in financial difficulties comes into an agreement with lenders to renegotiate favourable or flexible terms to save themselves from bankruptcy.

At the end of June and beginning of July 2023, multiple hearings in court were held, where all the creditors had to present and prove their debt claims in the process to be approved by the Administrator.

A request was submitted for recognition of the debt in favour of investors represented by Reinvest24 OÜ in the amount of 3,527,899.28 euros, equivalent to 68,476,525.02 lei. A request was also submitted for recognition of the debt to SRL Reinvest24 Group. To prove the claim and its eligibility over 300 pages of documents with agreements, payment confirmations, interest payment schedules had to be presented to the court.

Overall 16 companies presented their claims in this debt restructuring process and at least 8 of those creditors had the same UBO (Ultimate Beneficial Owner) as Metropolis City S.R.L. The claims they presented were approved on the basis that the accountants of both companies confirmed the existence of debt.

The claim was approved by the Court only in the amount of MDL 61,238,773.4 and it was included in the table of claims. Therefore, we filed an objection to the non-inclusion of the amount of MDL 7,237,751.62. The judge has not yet ruled on this objection. Also, the request for recognition of the claim filed by SRL Reinvest24 Group was returned. We have also submitted an appeal against this decision, which has not yet been considered.

In this case, we also filed objections against the creditors of SRL Kirsan Com, SRL Avanvo, SRL Kirsan Design, SRL Kirsan Life, SRL My Life Tech, and SRL Trans Stroy on the basis that they are affiliated creditors. These objections were rejected. We have appealed against the dismissal of these objections, which have not yet been considered by the Court of Appeal.

The offered Debt Restructuring Plan has to be accepted by voting of all creditors, where the voting rights are shared based on the accepted claim amount. The majority approves or declines the restructuring plans and schedules of repayments.

The debt restructuring Administrator and the Judge decided that Reinvest24 being the largest creditor is unaffected creditor and therefore can not vote for the approval/disapproval of the restructuring plan.

While our investors are the owners of the biggest claim presented in this debt restructuring process, the Administrator handling this process did not give us the voting right, classifying the claim as an “unaffected creditor”. This is usually done for the creditors, whose claims are being paid off right away, not on schedule or with any other changes to the presented claim.

However, we note that this plan, which was voted on at the meeting of creditors only by affiliated creditors of SRL “Metropolis City”, was confirmed by the judge of the Balți Court, headquarters Central, Valeriu Pădurari, by Decision 2i-12/2023 of July 11, 2023​.

We filed an appeal and a motion against this plan. The application for temporary suspension was accepted. The bankruptcy Administrator also filed a response to our appeal. We submitted written objections to the arguments presented by the bankruptcy Administrator.

The debt restructuring plan offer is to make payouts to the creditors with a mortgage (Reinvest24 investors) according to the following schedule:

  • 0% – 2023-2024; 
  • 30% – May 2024 – May 2025; 
  • 70% – May 2025 – May 2026.

The restructuring plan also has a request to the court to remove the mortgage from the properties that are used as collateral for those debt claims. If the court decides that the restructuring plan is good as it is and removes the mortgages, then the claim of unaffected-secured creditors becomes unsecured which drastically decreases the chances of getting the debt back.

The legal team have submitted an appeal against this plan and also submitted to the court an appeal against removing the mortgages from the collateral assets. The collateral assets need to stay in place and secure only the claims of our investors. There were multiple violations in the process performed by the court, judge, and administrator that we are also appealing separately.

Comment from our lawyers in Moldova

The plan for the restructuring procedure must necessarily include:

  1. classes of creditors whose claims will not be disadvantaged by the application of the plan in accordance with this law;
  2. the appropriate treatment of classes of creditors whose claims are disadvantaged as a result of a reduction in the amount of claims, or a reduction in guarantees, or for other reasons, such as instalment payments to the detriment of the creditor, or whether and to what extent the debtor, members of the economic group interest, shareholders of general and limited partnerships are exempt from liability;
  3. the recovery that will be provided to all classes of creditors over the estimated value that would have been received as a result of the distribution in the event of bankruptcy and which must be calculated as of the date the plan is proposed.

At the same time, I note that nowhere in the law does it say that mortgages can be canceled through a restructuring plan. The law provides for the possibility of reducing security, but not its abolition. In our experience, we have not encountered another restructuring plan that would involve the removal of all mortgages, and we believe that such a plan is unlawful against the secured creditor. Hypothetically, Reinvest24 OÜ will continue to be a secured creditor, however, if the mortgaged property is released from the encumbrance and sold, the status of the mortgage creditor will become only a formality. That is why we are now focusing all our efforts on this situation. The extremely fast pace of events and the attitude of the judge lead us to believe that these restructuring plans are directed against REINVEST24 OÜ. For this reason, we file a criminal complaint, a complaint to the judicial department and other competent authorities.

Reinvest24 assumes no responsibility or liability for any errors or omissions in the content of this article. The information contained in this article is provided on an "as is" basis with no guarantees of completeness, accuracy, usefulness or timeliness.

11 thoughts on “Metropolis City S.R.L. legal case overview – Kirsan

  • Thank you for the update. It looks more possible that investments in Moldovan are to be considered lost.
    Hopefully the recovery process can bring positive news from late projects in other countries.

  • Thank you for the update. It seems like there is still a bit to go. Please don’t give up!!

    I believe in you guys that you are doing everything you can!

  • Das ein Immoblie die mit einer Hypothek abgesichert ist, auf einmal in ein ungesicherte Sicherheit umgewandelt werden kann und dann einfach verkauft wird, ist ein absoluter Skandal. Dabei macht der Staat mit, bin gespannt wie über die Strafanzeige entschieden wird. ……wahrscheinlich wird diese eingestellt, aber ein Versuch ist es Wert.

    Auch endlich eine offene Kommunikation aus Sicht von Reinvest24 hilft vielleicht in diesem Fall weiter. Moldavien will ja auch in die EU.

  • thanks for the update, so it looks like we’re not going to take our investment back for the next couple of years, minimum?

  • Non devono solo restituire quello che stanno trattenendo ma devono pagare tutti gli interessi di legge ,i lavori stanno continuando e loro venderanno gli immobili e noi dobbiamo essere rimborsati con gli interessi

  • it’s obvious that we are not going to take our investments back soon if we receive them at all. The actions of the court are actions of criminals and having in mind the country we are talking about, most probably they will remove the mortgages, so you should think what you will do next. The corruption in the country is big. I do not see good news here. This hearings will proceed long time, may be years, as I see how fast the process is. I am feeling that all the creditors are working against Reinvest24 and this should tell you something. Look for a international responsibility of Moldovian state, because of the scandalous actions of the court which are out of sense. However you should give more frequently information to the investors. End of all those are our money.

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