A tender with hidden conditions: ARMA “forgot” to mention collateral in tender for manager of Gulliver shopping center

The Asset Recovery and Management Agency (ARMA) has once again come under criticism because the tender documentation for the search for a manager for the Gulliver shopping center does not indicate that the facility is pledged under a mortgage. The absence of this key information caused complaints from participants and raised doubts about the fairness and objectivity of the process, UNN writes.

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ARMA’s tender on the Prozorro platform to find a manager for the Gulliver shopping center was subject to  complaints about discriminatory terms of the tender documentation, including the customer’s failure to provide reliable information about the subject of the procurement and misleading the participants about the conditions (and the realism of the overall fulfillment of the terms of the asset management agreement).

In its response to the complaint, the Asset Recovery and Management Agency explained that the law allows for the transfer of property that is the subject of a pledge. However, the receiver (ARMA – ed.) is obliged to warn the manager that the property to be transferred to management is subject to a pledge agreement.

“If the receiver did not warn the manager and the manager did not know and could not have known that the property transferred to the receivership was subject to a pledge agreement, the manager has the right to demand termination of the agreement and payment of the fee due to him under the agreement in accordance with the term of management of this property,” ARMA quoted an article of the Civil Code.

At the same time, the agency reiterated that it does not bear any obligations under contracts of asset owners, including pledge agreements, and cannot influence credit transactions of previous owners.

Despite ARMA’s statement, it remains unclear why key information on collateral was not included in the tender documents. This calls into question the transparency of the receivership selection process, as the lack of information on property encumbrances may influence the decisions of potential bidders, and incomplete documentation creates risks for them.

In addition, as the agency itself noted, if the selected manager decides to terminate the contract due to failure to notify the collateral, this could lead to financial losses.

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On October 30, ARMA announced a competition to select a manager for the Gulliver shopping center. The head of the agency, Olena Duma, proudly stated that she had taken the strictest possible approach to the selection of a manager for this high-profile asset and even set the maximum possible 4 criteria for candidates. Among the conditions to be fulfilled by the bidders are property worth at least UAH 100 million, a professional team, proven experience in managing similar facilities, and proven financial solvency.

The building of the Gulliver shopping center is pledged as collateral for a mortgage loan with state-owned banks, including Oschadbank. However, among the criteria set out by the ARMA, there is no mention of the need to repay the loan. 

Oshchadbank has repeatedly stated that the decision to transfer Gulliver to ARMA harms the interests of the state-owned bank, as it will deprive it of loan payments from the company that owns the capital’s complex . The loss of income by Oschadbank due to the termination of loan payments could reach more than UAH 20 billion.

After the announcement of the tender, Arsen Miliutin, deputy chairman of the board of Oschadbank in charge of NPLs, said in a commentary to UNN that the state-owned bank plans to recover the building of the capital’s Gulliver shopping center in its favor if ARMA transfers it to management. He expressed indignation that instead of paying the loan to state banks, Gulliver’s earnings would be given to an “incomprehensible manager”.

Only after that, and under public pressure, did ARMA representatives decide to meet with Arsen Miliutin , the deputy chairman of the Oschadbank board responsible for NPL management. At this meeting, the bank’s representative emphasizedthat the state’s position in this situation should be “to ensure a positive investment climate, protect the interests of creditors and respect fiscal interests, and not just to formally comply with court rulings”. The ARMA, in turn, promised to once again examine in detail the relevant regulations for the possibility of including payments to creditor banks in the management costs.