Category: Latvia

Eversheds Sutherland Bitans has successfully represented the Latvian Privatization Agency and its subsidiaries in litigation against former Parex Bank shareholders. The agency was awarded EUR 124 million in damages and EUR 600,000 in legal expenses, after proceedings extending over ten years.

On May 18, 2021, the Latvian Senate decided against initiating an appeal-on-point-of-law in the matter. Thus the January 25, 2021 verdict of the Latgale Regional Court came into force, compelling former Parex Bank shareholders Valerijs Kargins and Viktors Krasovickis to reimburse the Latvian Privatization Agency for public funds invested in rescuing the bank.

According to Eversheds Sutherland, “the Senate decided that there were no reasons to conclude that the outcome of the judgment under appeal was manifestly incorrect or that the case would be significant to ensuring uniform case-law or development of case-law.”

The Eversheds Sutherland team was lead by Partners Agris Bitans and Ginta Krukle.

Sorainen has provided legal assistance to Latvian band Astro’n’out related to their composition of the anthem for the IIHF Ice Hockey World Championship 2021, which will be held in Riga, Latvia.

Sorainen’s team included Partner Ieva Andersone and Legal Assistant Lucija Strauta.

The Riga office of Sorainen has represented Danish furniture and home decor retailer JYSK before Latvia’s Constitutional Court, Competition Council, and Ministry of Economics regarding the government-imposed restrictions on commerce at shopping centers.

According to Sorainen, JYSK argued that the restrictions on shopping centers exceeding 7,000 square meters distorted competition in the market in Latvia and led to unequal treatment between objectively comparable undertakings. According to Sorainen, as a result of JYSK’s dialogue with the relevant governmental authorities, commerce at large shopping malls was authorized under alternative measures proposed by the firm.

Sorainen’s team consisted of Partners Ieva Andersone and Andris Taurins, Senior Associates Alisa Leskovica, Marika Grunte, and Viktorija Smirnova-Cerkasa, and Associates Viktorija Soneca, Anna Bogdanova and Linards Abelite.

Cobalt has advised joint lead managers Luminor and Swedbank on Latvenergo AS’s EUR 50 million green seven-year maturity bonds issuance.

Latvenergo is a state-owned producer of approximately 70% of the electricity in Latvia. The company operates four hydroelectric power plants, two combined heat and power plants, and a wind farm across Latvia.

According to Cobalt, the bonds were subscribed by 24 different investors, including pension funds, asset management funds, insurance companies and banks in the Baltic region, Finland, and Sweden, as well as the EBRD and the Nordic Investment Bank.” According to the firm, Latvenergo will invest the proceeds from the issuance in environmentally friendly investment projects. 

Cobalt’s Latvian team included, Partners Sandija Novicka and Gatis Flinters, Specialist Counsel Edgars Lodzins, and Associate Krisjanis Buss.

The Riga office of TGS Baltic, working with lead counsel Vinge, has advised the Lagercrantz Group AB on its acquisition of a 75% stake in Libra-Plast AS.

Financial details of the transaction were not disclosed. 

Libra-Plast is a producer of doors, hatches, and storage units for the marine industry. The company generated annual sales of approximately EUR 17.7 million in 2020. Lagercrantz is a Stockholm-based business-to-business provider of proprietary technological products.

According to TGS Baltic, as a part of the deal, Lagercrantz also acquired Libra-Plast’s Latvian subsidiaries, Libra Plast SIA and Lanos SIA. 

TGS Baltic’s team included Partner Andra Rubene and Associates Toms Tidemanis and Kaspars Treilibs.

Walless has successfully helped Latvia’s state-owned SIA Publisko Aktivu Parvalditajs Possessor recover EUR 1.9 million in damages in a lawsuit against Grindeks shareholders Kirovs Lipmans and Filips Lipmans.

JSC Grindeks is a Latvian company listed on the Nasdaq Riga that produces pharmaceutical drugs, medicine, and phytochemical medicine. The company was founded in 1991 and has been a joint stock company since 1997.

According to Walless, SIA Publisko Aktivu Parvalditajs Possessor filed an “unprecedented claim for damages caused to the state as a minority shareholder due to the failure of Grindeks majority shareholders to make a mandatory buyout offer, which led to a loss of approximately EUR 2 million to the state budget.” According to the firm, “this case is unique in Latvia since, first of all, it is one of the first claims made under the Financial Instrument Market Law of the Republic of Latvia and second, it aims to collect damages that the state has incurred as a shareholder of one of the largest pharmaceutical companies due to the breach of an obligation set by the Financial Instrument Market Law of the Republic of Latvia.”

Finally, according to Walless, “although the law envisages that majority shareholders are obliged to offer a buyout of shares to the other shareholders, there is no practice where shareholders failing to comply with this obligation would have been sued for damages. Thus, this case is unprecedented in Latvia and will be the source for new case law.”

Walless’s team was led by Partner Martins Mezinskis.

Editor’s Note: On January 19, 2022, Walles announced that the Riga Regional Court decision awarding more than EUR 1.9 million in damages is now final and not subject to appeal. According to the firm, “the Lipmans family filed a cassation appeal, but the Department of Civil Cases of the Supreme Court decided against initiating cassation proceedings. This means that the regional court’s judgment has become final,” with the defendants having to pay the amount back to the State Treasury.

Ellex Klavins has successfully represented the Ministry of Finance of the Republic of Latvia in legal proceedings brought by Latvian state companies against the former shareholders of AS Parex Banka, now doing business as AS Reverta.

According to Ellex, “claimants AS Parex Banka and [the] Privatization Agency of the Republic of Latvia (now SIA Public Assets Manager Possessor) raised a claim to collect contractual compensation of EUR 117.671 million, a penalty of EUR 6.472 million, and damages of EUR 17.383 million incurred due to false representations made by the defendants,  ex-bankers Mr. Valerijs Kargins and Mr. Viktors Krasovickis, under [an] investment agreement, pursuant to which the Latvian state took over the majority of shares of Parex Banka in late 2008 and afterwards provided multi-million state support to the bank, thereby saving it from insolvency.”

According to the firm, “the ex-banker defendants, in turn, filed a counterclaim challenging certain terms of the investment agreement to avoid their legal liability, thus involving the Republic of Latvia, in the capacity of the Ministry of Finance, in the proceedings, as co-defendant with respect to the counterclaim.”

Finally, Ellex reported, “both the first and the appellate instance court rulings were in favor of the Ministry of Finance of the Republic of Latvia. The appeal court satisfied a major part of the claim (EUR 124.336 million) and fully rejected ex-bankers’ counter-claim. The cassation complaint of the former bankers was rejected by the Supreme Court and the case was finally resolved in favor of [Ministry of Finance]. As a result, Kargins and Krasovickis are obliged to pay the state privatization agency and its subsidiary EUR 124.3 million, including legal costs. AS Parex Banka (at that time the largest independent Baltic bank) was taken over by the Latvian government in late 2008 to prevent a financial crisis that could have wrecked the fragile Baltic economies. Until now that is the only such kind of bank takeover in Latvian history.”

Ellex’s team was led by Senior Associate Raivis Leimanis.

Ellex Klavins and Latham & Watkins have advised Printful on a USD 130 million investment into the company by Bregal Sagemont, which resulted in a valuation of more than USD 1 billion for Printful. Goodwin Procter advised Bregal Sagemount.

Printful is a print-on-demand drop-shipping and fulfillment service, allowing e-commerce entrepreneurs to print and ship their designs. It was launched in 2013 by co-founders Lauris Liberts and Davis Siksnans.

Ellex’s team included Counsel Zinta Jansons and Associate Eduards Dzintars.

Criminal Law expert Violeta Zeppa-Priedite has moved from TGS Baltic to Sorainen in Latvia.

Zeppa-Priedite had been Head of TGS Baltic’s White Collar Crime & Corporate Investigations practice since October, 2020 (as reported by CEE Legal Matters on October 20, 2020).

According to Sorainen, Zeppa-Priedite will lead the Risk Management, Compliance, and Corporate Crime Investigation group within the firm’s Dispute Resolution & Risk Management team. She specializes in Criminal Law, with a particular focus on money laundering, corruption, and fraud.

“Violeta’s experience and expertise will boost the firm’s dispute resolution practice and will significantly support our clients in minimizing and eliminating criminal-law-related risks,” commented Andris Taurins, Partner and Head of Sorainen’s Dispute Resolution & Risk Management practice in Latvia.

TGS Baltic has advised the representatives of the European Central Bank on Latvian law matters related to the rejection of the appeals of ABLV Bank AS and its largest shareholders, Ernests Bernis, Olegs Fils, OF Holding SIA, and Cassandra Holding Company SIA, of the orders of the General Court of the European Union of May 6, 2019 (in ABLV Bank v ECB (Case C‑551/19 P) and in Bernis and Others v ECB (Case C‑552/19 P)), dismissing as inadmissible their actions for annulment of the ECB’s February 23, 2018 declaration that ABLV Bank and its subsidiary, ABLV Bank Luxembourg SA, were failing or were likely to fail.

According to TGS Baltic, “on February 23, 2018, the ECB found that ABLV Bank AS and its subsidiary ABLV Bank Luxembourg were failing or were likely to fail. On the same day, the Single Resolution Board found that it was not necessary to adopt a resolution scheme, because resolution action was not necessary in the public interest, within the meaning of point (c) of the first subparagraph of Article 18(1) and Article 18(5) of Regulation No. 806/2014.”

According to the ECB, due to the significant deterioration of liquidity of ABLV Bank AS, the bank would most probably be unable to pay its debts or other liabilities as they fall due. The bank did not have sufficient funds immediately available to withstand stressed outflows of deposits before the commencement of pay-out procedure of the Latvian deposit guarantee fund.

According to TGS Baltic, “on May 3, 2018, ABLV Bank AS and its biggest shareholders submitted applications to the European Court of Justice against the European Central Bank and Single Resolution Board about multiple potential violations. On May 6, 2019, the General Court of the European Union dismissed [those applications] as inadmissible.”

TGS Baltic’s team was led by Latvian Partner Nauris Grigals.