London Court of International Arbitration rules US$150 million owed to creditors by Sergiy Groza and Volodymyr Naumenko

New York, January 27, 2025 – The London Court of International Arbitration (“LCIA”) Tribunal has ruled that Sergiy Groza and Volodymyr Naumenko must pay approximately US$150 million in respect of outstanding debts owed to Argentem Creek Partners (“ACP”). Groza and Naumenko are the founders of the Odesa, Ukraine-based grain transshipment holding company, GN Terminal Enterprises Ltd (“GNT”), which encompasses the Olimpex and MetalsUkraine terminals in the Port of Odesa.

The ruling marks a new phase in ACP’s and Innovatus Capital Partners, LLC’s (“Innovatus”) ongoing enforcement action to protect their rights as creditors of GNT in response to actions the creditors believe have been taken by Groza and Naumenko to fraudulently strip assets from GNT. The award is granted to Madison Pacific Trust Ltd (“Madison Pacific”) that acts as facility agent and security trustee for ACP and Innovatus.

ACP originally provided GNT with a US$75 million credit facility in 2019 with security including mortgages and personal guarantees from Groza and Naumenko and in 2021 Innovatus provided US$20 million in working capital facility which shared in ACP’s security package and was contractually required to be secured by GNT’s inventory. ACP and Innovatus provided support to GNT through the life of the loan to assist it with the challenges the business was facing, primarily because of the global coronavirus pandemic. However, GNT was unable to repay neither ACP nor Innovatus when the facilities matured in December 2021, well before the full-scale invasion of Ukraine.

In August 2022, while ACP and Innovatus were offering to discuss a restructuring of the now defaulted facilities to further support GNT through the war, they discovered that US$130 million of GNT’s inventory had been liquidated without plausible explanations. Despite repeated efforts by ACP and Innovatus to understand the reason for the liquidation, Groza and Naumenko and Dusan Denic, GNT’s CFO, refused to provide any coherent explanation, to submit to a financial audit, nor to give access for grain silos to be inspected. This led the creditors to reluctantly take the decision to enforce.

As soon as ACP and Innovatus commenced steps to safeguard their investment, Groza and Naumenko conspired with Pivdenniy Bank and Vostok Bank to transfer through a sham enforcement almost half of the Olimpex terminal facility to entities controlled by Sunolta LLC for only US$4.3 million.

Groza and Naumenko also conspired with a Swiss entity, GNT Europe SA, whose director is Russian citizen Mikail Ipatov, to transfer eight subsidiaries which own elevators worth approximately US$50 million to GNT Europe for zero value.

To prevent further asset dissipation, Madison Pacific secured a US$118 million Worldwide Freezing Order (“WFO”) over GNT’s assets from the English High Court in January 2023, which was upheld in February 2024. Groza and Naumenko were sentenced in October 2024 to 21 months in prison for contempt of court after failing to comply with an order requiring them to give proper disclosure of their assets under the WFO and to explain the whereabouts of US$97 million of dividends extracted from GNT over the past decade.

An investigation by the Ukraine Bureau of Economic Security (BES) is ongoing into financial crimes at the Olimpex terminal. BES appear to have discovered that Attollo Granum, a GNT subsidiary, in illegally operating the Olimpex terminal, has evaded UAH 30 million in taxes in the 2023-2024 tax year alone by deliberately understating the tax base, transferring unaccounted profits to international bank accounts and then transferring them back into Ukraine via illegal cash dispensing points.

John Patton, Founding Partner – Head of EMEA & Asia at ACP said:

“Today is a milestone in our ongoing fight to protect our investor’s rights in Ukraine. This arbitration award reaffirms the importance of honoring financial commitments and the integrity of agreements. It is unfortunate that the founders of GN Terminals chose to disregard our investment and refused our repeated offers to restructure the loans with the benefit of transparency of information.

“The LCIA Tribunal has upheld our rightful claims and recognized the significant harm caused by Groza and Naumenko’s default on our investors, and the subsequent asset dissipation. Ultimately further investigations by law enforcement have revealed that this harm extends to Ukraine itself as the terminal has been operated for three years since the outset of the war without transparency and without payment of taxes to the budget.

“We see this award as a clear marker that GNT’s actions are illegal, and we will be using it to support our ongoing efforts to enforce and to assume control of the Odesa terminal facility and transform it into a transparent business that contributes to Ukraine’s tax base.”

The approximately US$150 million award comprises principal and interest (as of January 13, 2023) of US$116,414,437.71 due under a secured loan originally extended to GNT in 2019. Groza and Naumenko guaranteed the repayment obligations via suretyship agreements, which they have failed to honor. Further interest calculated at US$32,980,540.62 on June 5, 2024, has also been awarded, and will continue to accrue until payment is made in full. Groza and Naumenko have also been ordered to pay the entirety of the legal fees and arbitration costs incurred by the creditors in prosecuting their claims.

An application to recognize the award, made on January 6, 2025, was issued on January 22, 2025, in the district court of the Southern District of New York (case number S.D.N.Y. 1:25-cv-00642).

Madison Pacific was represented by Hogan Lovells International LLP and by Nathan Pillow KC and Mubarak Waseem, Counsel of Essex Court Chambers, London during the arbitration proceedings. Groza and Naumenko were represented by Fortior Law S.A. and by Harris Bor, Counsel of Twenty Essex Street, London.

ENDS

Note to editors:

About Argentem Creek Partners Argentem Creek Partners is an emerging markets specialist investment firm committed to delivering value for investors and partners. The firm seeks to deliver uncorrelated emerging market alpha by investing in special situations, private credit, high yield, trade finance, and bespoke capital solutions. Argentem Creek was founded in 2015 by Daniel Chapman and his former team from Cargill, Inc. subsidiary, Black River Asset Management. https://www.argentemcreek.com

About Innovatus Capital Partners, LLC Innovatus Capital Partners, LLC is a New York based registered investment adviser and portfolio management firm with over US$1.8B in assets under management; focused on creating value across special situations, emergent asset classes, private credit and asset-based investments. Innovatus adheres to an investment strategy that identifies disruptive and growth opportunities across multiple asset categories with a unifying theme of capital preservation, income generation, and upside optionality. The Firm has a dedicated team of agriculture finance investment professionals with deep experience in emerging market lending and a strong network of relationships across local contacts and industry participants. www.innovatuscp.com