A Promising Start

Interchem Distribution Europe OÜ, a company specializing in the import and export of chemicals, had a plan for increasing trading volumes but was lacking finances so it applied for the missing funds with a business loan. The conditions for financing were strict, requiring a personal guarantee of the sole board member and owner in addition to pledging 100% of the company shares. This initial project proved successful, as the company saw a 20% increase in volume and a 50% in profitability.

The company returned the borrowed money along with the interest, setting a success story for the first high-yielding business loan on the platform. Encouraged by the success, Interchem proceeded with a second round of financing, aiming to achieve similar growth and profitability targets, offering our investors 18% interest.

Challenges and Adaptation

The geopolitical landscape shifted dramatically regarding the Ukraine conflict, after Interchem’s second financing round. Despite the turbulent environment, the initial months showed promising development, with profitability almost doubling. However, the sanctions soon followed, making direct trading with Russia impossible. In response, Interchem adapted by redirecting its trade flows through Turkey.

As the deadline for loan repayment approached in 2023, Interchem requested additional time to return the loan, citing that funds were stuck in a Turkish bank. Despite these challenges, Interchem continued to service their loan and pay interest, although the payments began to slow down and become irregular due to their banks’ AML (Anti-Money Laundering) processes.

Legal Proceedings and Agreements

Since no return was done during summertime, as a result of lengthy negotiations by autumn 2023, Interchem and its board member entered into an agreement to repay the loan within five months. Unfortunately, this agreement was not honored as two deadlines passed with no payments. Consequently, R24 initiated bankruptcy proceedings against both Interchem and its board member and sole shareholder Aleksei Baranov.

Bankruptcy processes are notoriously lengthy and complex, with no guarantees of recovering the debts, where the opposing sides rather tend to avoid fulfilling their debt obligations. In parallel to the court hearings the negotiations were held, R24 and Interchem, along with Aleksei Baranov, eventually signed a notarized agreement for the return of the debt, which resulted in a better situation and higher probability of recovering funds than in a bankruptcy proceeding. As the company trades internationally the bankruptcy administrators tend to avoid international litigation as it’s very lengthy and unpredictable and generates enormous costs, which creditors have to cover before any results are achieved. According to the agreement signed, the first principal payout is scheduled for September 2024, with the final return of the principal expected by the end of 2025. Those dates are set as border deadlines and if Interchem is able to pay the debt back earlier, it will.

A Strategic Path Forward

While the timeline for repayment is extended, this strategy is considered more favorable than pursuing bankruptcy. Bankruptcy would halt the company’s operations, eliminating cash flow and necessitating additional financing for legal disputes, which could span 2-3 years or longer without any guarantees of recovery. Therefore this notarized repayment agreement is a more pragmatic approach.

Under the terms of the agreement, returns will first cover incurred legal costs, and the principal returns will be distributed in equal parts to all investors across all stages. Investors can anticipate the first payout by the end of September 2024. Should Interchem fail to make the payment, the notarized agreement provides options for enforcement proceedings without a court order, which is a lot faster process than bankruptcy.

Understanding the Risks

Business loans inherently carry risks, which have materialized in the case of Interchem. It’s essential to recognize the risky nature of business loans and the implications they can have on investors.

In conclusion, the notarized agreement offers a viable solution for the repayment of debt. Even though the timeline is extended, it significantly improves our investor’s position for getting back their invested capital. The alternative options involve prolonged legal disputes and costs with uncertain outcomes.

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In the world of business, transparency and integrity are the cornerstones of trust. When these principles are compromised, the ripple effects can jeopardize an entire company’s stability and reputation. This article sheds light on the unsettling revelations about Maxim’s conduct as a board member at RE24 ESP, highlighting conflicts of interest, financial mismanagement, and the troubling overlap between Kirsan Security and Maxim Enachi’s activities.

The Legal Responsibilities of a Board Member

A board member of the company is the representative of the highest executive power in the company whose primary duty and legal obligation is to act in the best interests of the company and its shareholders. This includes organizing the company’s operations, overseeing financial and general management, representing the company in various capacities, and ensuring decisions taken are done in the interest of the company foremost. Board members can perform bank transactions from the company accounts, buy/sell transactions of real-estate and other company assets, hire and fire employees etc. The sole shareholder of RE24 ESP is Reinvest Holding, represented by Natalja S. As such, Maxim Enachi should have been prioritizing the interests of RE24 ESP, Reinvest Holding and Reinvest24 OU, the loan provider, when organizing operations in RE24 ESP. Performing operations that cause damage to the company by selling its assets is a misconduct, especially if such a transaction happens with the company, where Maxim himself was a shareholder in the past and the board member for over 6 years.

Financial Mismanagement and Nepotism

During the time in the company management Maxim Enachi hired his wife and the wife of his accomplice who did not perform any function in the company operations. This was done in addition to notable fuel compensations and payments for drinks and even sometimes food, the traces of which were found within the company’s accounting documents, further indicating misuse of company funds and attitude that RE24 ESP “pays everything forward”.

Questionable Subcontracting Practices

Maxim’s choice of Kirsan Building as a subcontractor was justified by him by lower prices with comparable or better quality of construction. Which sounded reasonable, until the construction budgets started to inflate. Being a board manager also in Kirsan Building, the main subcontractor, Maxim Enachi was making transactions from RE24 ESP accounts to Kirsan Building accounts. For example the amount of payments made for works in Xirivella overshot the budget by 20% and the project still remained unfinished. Similarly, the La Canada project has seen payments totaling over 500k by March 2023 with minimal progress, casting doubt on the efficiency and integrity of Maxim’s project management. The budget/offer presented by Maxim from Kirsan Building for construction works was about 230k per house. In June 2023 Maxim made a notarial document stating that La Canada project requires additional financing in amounts close to 1m. Also worth noting, that no mentions (still) in this document of the sale of the land plot in San Antonio to Kirsan Building.

Unjustified Mortgages and Exaggerated Claims

Adding to the financial discrepancies, Maxim Enachi installed mortgages on La Canada amounting to 386k for works supposedly performed by the Kirsan Building. The total claim for these works exceeds 900k, surpassing the project’s total budget and suggesting significant inflation of reported expenses. The same operation was performed with the L’Eliana land plot with a different amount of 783k. The annual report presented by Maxim states that the company has no debt on 31.12.2022 in front of Kirsan Building. This mismanagement indicates either gross incompetence or deliberate misconduct.

Greed, Conflicts of Interest, and Overspending

Maxim Enachi’s desire for personal gain is evident in his aspiration for company shares without delivering results, which underscores his actions against RE24 ESP’s interests. His conflict of interest is further exemplified by his inability to properly manage a simple land plot division (San Antonio plot was supposed to be divided into 5 residential plots), opting instead to sell it to Kirsan Building without informing the only shareholder and the lenders. Maxim knew exactly that there are several hundreds of individual investors providing financing for the San Antonio project, yet this was not a significant enough fact not to perform a ‘debt settlement’ transaction with about half of the market price value. This pattern mirrors issues seen in Moldova, suggesting a recurring theme of financial irresponsibility and self-serving actions with the same plan to initiate bankruptcy of the company and get control on the mortgaged assets.

Lack of Transparency and Accountability

Throughout his tenure, Maxim Enachi failed to provide the requested documents to Reinvest24 and its legal representatives, instead demanding payment for himself and his unpaid employees. This lack of transparency culminated in his departure, leaving the company in difficulties, with tax debts and unresolved financial obligations.

Shared Hosting and Alarming Questions

It is worth noting that Maxim’s freshly registered website and Kirsan Security website (kirsansecurity.com and maximenachi.com) are hosted on the same servers, which is raising significant concerns. Why is Maxim utilizing the same account as Kirsan Security? Or who is the actual author of the published article? This overlap hints at deeper, potentially inappropriate entanglements between Maxim Enachi’s personal interests and his professional (ir-)responsibilities at RE24 ESP.

Legal Action Against Maxim and Kirsan Building

Addressing the violations and wrongdoings, RE24 ESP initiated a legal case for protective measures against the Maxim Enachi and Kirsan Building SL in August of last year. This move was a necessary step to safeguard the company’s assets and investor’s interests. After several court hearings, the efforts of the RE24 team led to the first significant resolution.

The court ordered the arrest of Maxim's and Kirsan Building real estate properties in  Spain, marking a pivotal moment in the pursuit of accountability and justice.

The quantity and the value of those properties is not great, but it’s an important step to provide justice. Unfortunately, Kirsan Building was able to sell the San Antonio land plot in September 2023 and this court decision doesn’t include it. This legal action underscores the serious nature of the allegations and the company’s commitment to rectifying the wrongs inflicted by Maxim’s actions.

Conclusion

The revelations about Maxim’s conduct at RE24 ESP are a stark reminder of the importance of accountability and transparency in corporate governance. His actions, marked by financial mismanagement, conflicts of interest, and a blatant disregard for company and investor’s interests have caused significant damage. Our main priority is to resolve the issues in the Spanish SPV and recover the investor’s funds by taking the individuals responsible for the damages they caused through Spanish court.

P.S.

Maxim can shed a light on one question that we have in our heads and can’t find absolutely any answer to:

How did you plan to return the money to investors, who invested into the San Antonio project after giving the ownership of this land plot to Kirsan Building as a ‘debt settlement’? From other projects? Or bankruptcy was the only option?

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.

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During the period from 2020 to 2023, the real estate market in Moldova experienced significant growth, with prices rising by approximately 30% on average, and even higher for newly built properties (40-50%). Additionally, the average official income per person increased from 8,860 MDL at the end of 2020 to 13,400 MDL in Q4 of 2023. Despite the negative growth of GDP in 2020, Moldova’s GDP increased from 11.53 billion USD to 14.78 billion USD in 2023 showing an impressive growth.

Challenges

An important aspect of entering Moldovan market was that there is a partner and shareholder who is operating on that market. In 2020, after entering a partnership with Kirsan, we published a comprehensive review of the Moldovan market, economy, and the new presidency of Maia Sandu, along with market outlooks. As we reassess the situation now, we find that our fundamental outlooks have largely proven correct. However, certain unforeseen challenges related rather to the legal system in the country have emerged, impacting projects in Moldova (and other countries) and our investors.

Legal Proceedings

After the companies associated with Kirsan instead of fulfilling their obligations and given promises relocated theif offices to small city of Bălţi located 140 km away from Chisinau (the full address is Bălţi, str. Sfântul Nicolae 112) and the next day initiated the accelerated debt restructuring procedures, we, as it is expected in modern world and democratic Country, got the debt to our investors proved and confirmed by the court in every process that was initiated for the companies in debt.

Despite our efforts to seek resolution through legal channels, we have encountered questionable decisions by the courts and bankruptcy administrators. However, we have escalated the matter to other authorities, including the Anti-Corruption Agency of Moldova.

We are encouraged by the appointment of young, energetic and very promising investigator Victor Fromusachi to lead the investigation. Our representatives have met with him to provide information and details and have received a positive feedback.

Positive Change

When Maia Sandu assumed office in 2020, the central goals and pledges of her electoral campaign were aimed at reducing (if not eradicating) corruption within the nation and steering it toward EU integration in the foreseeable future. The ongoing investigation and the government’s attention to this issue will help our investors and make the country a better place for investing. We anticipate that the ongoing investigation and the authorities’ keen interest in this matter will yield favorable outcomes for our investors and contribute to fostering a positive image and investment climate for the country itself.

We remain committed to transparency and diligently working to address the challenges faced by our projects in Moldova. We appreciate the continued support and understanding of our investors as we navigate through these complexities.

_{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.}

The post Moldova’s Property Boom and Its Bumpy Road: Growth, Legal Issues, and Hope appeared first on .

The main purpose of this update is to provide you with a full overview of the current situation with each project, together with relevant documents. All the actions we have taken in 2023 had a single goal, to protect the investment projects and the invested capital. That is also the main priority for the new Spanish team, to resolve the issues that the previous management and construction company created, and to move towards the repayment with each project.

Starting the Spanish branch operations

In 2021 with Kirsan entering Reinvest24 as a shareholder, Reinvest24 expanded to the Spanish market forming an SPV. Maxim Enachi was appointed as an Administrator of the SPV to implement the projects on the local market. Spanish SPV successfully acquired 4 projects on the Spanish market in the Valencia area and was in the process of acquiring another two.

The need to step in and make changes

In 2023, after annual reports for previous years were still not presented and multiple projects were experiencing delays with their implementation and completion, we initiated an independent review of the projects to get a second opinion, with the goal of speeding up processes. The first information that came back forced us to initiate the replacement of the management in the Spanish branch and make a full review of the previous operations.

Auditing and reviewing previous operations

The dismissed director Maxim Enachi didn’t provide any of the documentation for the company accounting or project implementation, that the Administrator of the company should naturally have and provide after being dismissed. This made the reviewing process difficult and lengthy, as we had to recover the documents one by one from different entities. We are still currently working on fixing accounting and construction mistakes and irregularities.

Results and current situation

In the second part of 2023, we achieved full control over the Spanish SPV and the real estate properties the company owns and we have completed the lengthy reviewing process. In this process, we identified many questionable actions by the previous management and Kirsan Building SL, which made us initiate legal actions to apply protective measures. Unfortunately, the Spanish court has been extremely slow to process our request.

Montesano

The Montesano land plot was acquired by Spanish SPV RE24 ESP SL in 2021. In the loan agreement concluded and signed by Maxim Enachi as the director of Spanish SPV (borrower), it was agreed that this land plot is the collateral for investor’s loan and Maxim Enachi takes personal responsibility for it.

The land plot is quite large and was supposed to be divided into 5 independent plots with houses built on each one of them. The documents for the division were allegedly presented to the local authorities by SPV management, but authorities experienced long delays in processing this division. The initial estimation for the project implementation provided by Maxim was 12 months. Maxim chose Kirsan Building as the main subcontractor for performing the work on this plot. From the beginning of the project following works have been performed:

• Cleaning from old trees and leveling of the land plot – 30,000 EUR to Kirsan Building
• Agency fees 6,352 EUR
• Taxes 35,000 EUR
• Architectural planning related to land division 6,455 EUR
• Architectural project 2,686 EUR
• Operational expenses

Current situation

In May 2023 during the audit, auditors noticed the pending registration of some kind of agreement for this property. Maxim Enachi never provided explanations for this despite multiple requests. At the end of June, during the RE24 ESP SL shareholders meeting, Maxim Enachi stated that everything is progressing with the Montesano project, while he actually performed a sale of this plot to Kirsan Building SL already in January and correction to this agreement was made in April.

In July we were able to get the mentioned in nota simple agreement from the notary. The agreement stated that the land plot was sold in January to Kirsan Building SL to settle the debt (without explanation), while in the balance sheet of RE24 ESP SL at the end of 2022, there was no debt in front of Kirsan Building SL. While we were monitoring the Spanish SPV bank account transactions, there were no payments done regarding this transaction. The notary and other fees were paid in some other way. It is also important to note that the sale transaction was made by Maxim Enachi to satisfy 350’000 EUR Kirsan Building SL’s alleged claim, while the property value was estimated to be 750’000 EUR.

The claim to the Spanish court was immediately filed (beginning of August) to apply protective measures to this sale transaction (and land plot) until the case was reviewed by the court. We’ve been expecting a fast reaction from the court for such an important matter. Regretfully, despite several visits and reminders by lawyers, the court set the hearing of our application for protective measures to 13 December 2023 only. In December the hearing was postponed to January 29th and later to March 28th, 2024 due to the request of Kirsan Building SL and Maxim Enachi’s lawyer (representing both) explaining by the inability to be present and the date conflict with another hearing.

In November it also became evident that despite all presented requests Kirsan Building SL sold the Montesano land plot to PUCHANETTI SL.

At the moment we are still expecting the court’s reaction to the presented claim and some judgment.

Xirivella

Xirivella acquisition preliminary agreement was signed at the beginning of 2021. The initial estimation provided by Maxim for the project completion was 9 to 12 months. The property was sold by the bank, and the ownership of apartments went over to Spanish SPV, but storage room ownership belongs to the previous owner, the company, which is in bankruptcy. Spanish SVP has mortgages on those storages. The bankruptcy administrator of the owner company is the same person, who represents Kirsan Building SL and Maxim Enachi in court.

Once the new construction company was able to enter the building (the keys and the security codes were not passed over by the ex-Administrador or construction), the works done and the works required to finish the construction were assessed. The amount of work required to be performed to finalize the construction was estimated to be in the ballpark of 150’000 EUR, but later we also got information that some additional debts exist e.g. for the works performed by the Architect team, electric company, and others. Some works needed to be redone due to poor quality. Also, the premises were used by Kirsan Building SL to accommodate their employees (construction workers), which required almost total renovation and replacement of furniture and technics of 2 apartments. The cost of the cleaning of the premises alone was 6,000 EUR. Also, additional works on cleaning some elements from construction dust have yet to be performed – e.g. conditioner pipes, that should but were not isolated during the dusty construction process. There is still an issue with storage rooms to be resolved.

Current situation

The Xirivella apartment building in Valencia is currently owned by Spanish SPV. At the moment the new team is finalising the construction of the premises and demonstrating the apartments to the potential buyers. As of right now, 1 out of 10 apartments is reserved and this property is closest to completion of all the projects managed and implemented by the Spanish SPV.

Gandia

The project was started in 2022 and the fee to book the property was paid to the land owner. The rest of the settlement of this deal was supposed to happen as an exchange for Xirivella apartments. This is the agreement concluded by M.Enachi with the seller. There were also payments made to the local government for construction licenses.

After M.Enachi was removed from the management the Gandia project was reassessed (as all others) and the conclusion was that in the current situation, the financing of the construction would be problematic and potentially lead to a ‘stuck’ project, and also the liquidity of the proposed buildings will be quite low and require a lengthy period for selling those townhouses with an estimated price. As a result, the decision was not to continue with this project, and as the exchange deal was not finalized, the project will receive some damage from the made payments, but the refinancing which was made to buy out Xirivella apartments to perform the exchange will be reversed and the funds paid out. This will provide a faster return to investors and also finishing the construction of Xirivella will happen a lot faster than performing the new construction and selling of those properties in Gandia.

Current situation

The project will not be finalized. The repayments will be performed from the sale of the apartments supposed to be part of the exchange deal.

Casablanca

The project was initiated in late 2021 and the plan was to buy 16 terraced houses with 11 garages and a swimming pool with a total cost of just under 2m EUR. The initial funding for this project was collected, but the seller’s AML service didn’t agree to let the selling transaction through in the way it was agreed with SPV, explaining that they would need to perform an AML procedure not only for SPV, but for every investor of the project. After the reversal of the initial transaction, the funds were sent again via the company belonging to Sergiu Coman (a minor shareholder in Reinvest24). After several months of delay the seller’s AML service still refused to make the transaction. The partial return of funds was performed, but the technical possibility of partial return of funds to investors does not exist or can be performed only by writing off missing principal. After the management of the Spanish SPV was replaced, a new plan for the payout of the missing amount is being created.

La Canada

The project is a development of 4 villas in the residential area of Valencia suburb started in mid-2022. After the land plot with frame construction on it was acquired, the works on those were started. All construction works were ordered from Kirsan Building SL by M. Enachi and justified by the lowest offer received. About 60% of the proposed budget was paid out to the construction company. During the audit of the project, there were numerous issues identified in the quality of the construction performed. We captured the current state of the building and the works performed via notary service after taking over the property, you can find it from here.

The architectural project was updated to be more attractive for the buyers and the new team made plans for finishing the construction and fixing the existing issues in construction.

In late autumn we found out that there is a notarized debt acknowledgment done by M.Enachi in favor of Kirsan Building SL in the amount of 396’489.02 EUR accompanied by burdening all 4 villas with this debt.

Current situation

The La Canada 4 villas located in the suburb of Valencia, the crossing of Calle 229 and Calle 232 are owned by SPV RE24 ESP SL. We are starting a legal action to appeal the debt-related claims set on these properties in favor of Kirsan Building SL. The completion of the project requires additional financing to complete the construction works, which would be the best option for selling the villas at a fair price. We have started the presale of the villas, which could also help to partially finance the works. The second option is selling the project as it is, but this would lead to substantial capital loss for investors.

L’Eliana

The L’Eliana land plot acquisition was finalized in early spring 2023. Due to other projects in Spain not being finished on time, no actions were made for this project to start any construction unless some previous projects were finalized and exited. Late autumn we found out that there is a notarized debt acknowledgment done by M. Enachi in favor of Kirsan Building SL in the amount of 783’499.34 EUR accompanied by burdening a land plot with this debt.

Current situation

The L’Eliana land plot with the address L’ELIANA en OTROS SECTOR SUZR-1 is owned by Spanish SPV RE24 ESP SL. We are starting a legal action to appeal the debt-related claims set on these properties in favor of Kirsan Building SL. The new Spanish team is offering the project to local real estate developers and we are also looking into possibilities for refinancing. Selling a project of this size fast in the current market will require to decrease in the selling price, which will likely result in capital loss for investors.

Conclusions

Despite the usual controlling measures applied as monitoring the Spanish SPV bank account, the company financials, the documentation, progress, and video reports provided by the management, it was not possible to identify the notarial transactions made by Maxim Enachi in real-time. The notary and other fees were not paid from the company account and a settlement was made against a claim. At the end of 2022, there was no debt in front of Kirsan Building SL on the company balance sheet and also the accounting documents that we were able to recover from the previous accountant did not have anything that supports the alleged claims.

The agreements made for selling the Montesano plot, the same as encumbering the La Canada and L’Eliana projects didn’t have any explanation of the origin of the debt. Based on the offers for construction works presented by Kirsan Building SL (the reason why Kirsan Building was chosen as a construction subcontractor), the works that were approved and accepted, invoices that were paid to the subcontractor by Maxim Enachi, do not align with the notarised audit results on the construction works on Xirivella and La Canada properties. Therefore any debt that Kirsan Building SL claimed to have is questionable, but Maxim Enachi confirmed the debts at notary in substantial amounts without notifying the shareholder.

The audit revealed numerous facts and actions carried out by the former management and Kirsan Building SL. It is evident that these actions raise serious questions regarding their legality, suggesting a deliberate attempt to benefit personally at the expense of Reinvest24 and its investors. Our legal team is currently in the process of compiling this case and deliberating on the necessary legal course of action to address and resolve this situation.

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.

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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 Kirsan Com S.R.L., the borrower of the Green Park Home residential development project.

We requested Kirsan to provide several real estate properties as collateral to meet our term of 60% LTV for Green Park Home residential project financing on the platform. Altogether 9 different real estate properties (gym, offices, land plots) were included in the loan agreement and encumbered with a 1st rank mortgage to fulfill this term. Additionally to collateral properties owned by SRL Kirsan COM (0100105.050.01.066-0100105.050.01.069 and 0100108.019.01.164 – 1st rank mortgage), 3 additional guarantors are affiliated companies with Kirsan: SRL Fitness Forma ( 0100101.865.05.104 – 1st rank mortgage), SRL Valen Construct (01001119.451-01001119.453 – 1st rank mortgage) and SRL Econom House, who is the owner of the Green Park Home development project.

Kirsan Com SRL accelerated restructuring

Administrator: Selevestru Irina

Judge: Pădurari Valeriu

SRL “Kirsan COM” had its headquarters in the municipality of Chisinau, bld. Dacia 59. in the freshly built office where most of Kirsan companies were relocated. In March of 2023, the Kirsan COM 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 the development and construction of several projects in Chisinau needs to change headquarters to the municipality of Balti – 140km and 2 hours away from the center of its activity. Soon the portal of the courts and the Official Gazette of the Moldova Republic published the following Court Decision:

Bălți Court, Central headquarters no. 2i-13/2023 of May 15, 2023 – accelerated restructuring procedure of SRL “Kirsan COM”.

From this document, you can see, that on 9 March 2023 (the next day after the change of address) Kirsan COM SRL applied for the accelerated debt restructuring process in the local court of that small city. Debt restructuring is the process, where a company in financial difficulties comes into an agreement with lenders to renegotiate favorable 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.

We have submitted a request for recognition of the secured claim of Reinvest24 OÜ in the amount of 855,661.86 euros, equivalent to 16,608,396.70 lei. However, only the amount of MDL 15,671,604.80 was accepted into the table of claims, and the amount of MDL 936,791.90 was not accepted. On the day of the meeting (06/29/2023) we agreed to waive half of the penalty so that the bankruptcy administrator agreed to include in the table the amount of 15,671,604.80 lei and the amount of 456,394.40 lei, in total the amount of the confirmed claim will be 16,127,999.20 lei.

In this case, we also filed objections against all affiliated creditors of the debtor SRL Kirsan Com: Coman Mircea, Coman Serghei, SRL Kirsan Stroy, OCN People Credit SRL, SRL Assorti Grup, SRL Avanvo, SRL Capital Activ Group, SRL Econom House, SRL Kirsan, SRK Kirsan-Life, SRL KRS Project, SRL Locuința Confortabila, SRL Metropolis City, SRL Miraflores, SRL My Life Tech, SRL Nicotau, SRL Stroy Birja, SRL Kirsan Invest, SRL SVKD Project and SRL Trans Stroy.

The judge was scheduled to make a decision to confirm the claim on 06/30/2023. A meeting of creditors was also scheduled for the next day to vote on the accelerated restructuring plan. On the morning of June 30, 2023, an unconfirmed creditor of SRL Arte Ex Construct filed a motion to transfer the case to another court. The transfer request was rejected by the Balti Court of Appeal. This creditor filed an appeal, which was scheduled to be considered by the Supreme Court on November 29, 2023. The presented objections were considered, but the judge did not rule on them due to a motion to transfer the case. Usually, there are several grounds for disqualifying judges. For example, if he is a relative of one of the parties or has some interest in the process. The most common ground used by parties is that there are certain indications that the judge will not be impartial (at the moment we don’t have information on what basis the creditor SRL Arte Ex Construct filed a motion). The Supreme Court hearing is scheduled for February 14, 2024.

SRL Kirsan COM and SRL Valen Construct claim to remove mortgages

4 days before the SRL Kirsan COM accelerated restructuring process was started by the Bălți Court (May 15, 2023), on May 11, 2023 SRL Kirsan COM and SRL Valen Construct submitted a joint application to the Chisinau Court to remove the 1st rank mortgage from real estate properties with cadastral nr. 01001119.451-01001119.453, owned by guarantor SRL Valen Construct and real estate properties with cadastral nr. 0100105.050.01.066-0100105.050.01.067, owned by the borrower SRL Kirsan COM.

The basis of this claim was, that these non-residential real estate properties were provided as collateral (1st rank mortgage) for the loan issued to SRL Kirsan COM residential real estate development project Traian, and this loan was fully repaid. While it is correct that the loan issued for the previous project was fully repaid by SRL Kirsan COM, these real estate properties were used as collateral for their next real estate development project implemented by SRL Kirsan COM – Green Park Home residential development project.

The judge of the first instance rejected applications filed by SRL “Kirsan COM” and SRL “Valen Construct” regarding the security of the claim. Opponents appealed against the relevant decisions, which the Chisinau Court of Appeal has already rejected. The next court hearing for this matter is scheduled for March 12, 2024.

SRL Fitness Forma claim to remove mortgage

April 28, 2023 SRL Fitness Forma submitted a request to the Chisinau Court to remove the mortgage from the collateral property owned by them with cadastral nr. 0100101.865.05.104. The claim submitted to the court for removal of the mortgage was based on an argument that this property (gym) was collateral for SRL Kirsan COM previous development project Belgrad, and that the loan is fully repaid.

While it is true that SRL Kirsan COM made a full repayment of the loan issued for the development of Belgrad project, new agreements were conducted and signed to use this property as collateral for the Green Park Home residential development project implemented by SRL Kirsan COM.

The judge of the first instance rejected applications filed by SRL “Fitness Form” regarding the security of the claim. Opponents appealed against the relevant decisions, which the Chisinau Court of Appeal has already rejected. The next court hearing will take place on January 31, 2024. However, if we present new evidence, the plaintiff may require time to analyze it.

Comments from our lawyers in Moldova

Apparently, the creditor who filed the transfer request with a court of equal jurisdiction aims to delay the examination of the restructuring case of SRL Kirsan Com. Given that procedural legislation regulates various tools allowing a party to delay the case, it is possible that the file may not return to the Bălți Court soon. Unfortunately, this adversely affects all other creditors, as the activities of SRL Kirsan Com are halted, and any enforcement procedure against this debtor is suspended.

The disputes related to the withdrawal of bail filed by SRL “Fitness Forma”, SRL “Kirsan Com” and SRL “Valen Construct”, the plaintiffs have requested the court to take security measures in the form of a ban on any actions of Reinvest24 OÜ related to these properties. With these measures, opponents want Reinvest24 OÜ to be denied access to the exercise of collateral until the court decides on the merits of removing collateral from the Real Estate Register.

_{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.}

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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:

• Metropolis 4D development
• Metropolis 4A development
• Metropolis Business 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.

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