On March 28, 2023, the Ninth Arbitration Court of Appeal overturned the arbitration decision to recognize the transaction for the sale of the Russian magazine Forbes to businessman Magomed Musaev as invalid, a Vedomosti correspondent reports from the courtroom.
The case in the Moscow Arbitration Court was considered on the basis of an application filed in the spring of 2022 by the bankruptcy trustee of FAF Media LLC Valentina Chuprinskaya. She sought the recognition of the purchase and sale of the Russian Forbes as invalid, referring to the fact that the asset was sold below the market value.
In August 2018, FAF Media LLC, which owned the Russian version of Forbes, owned by Alexander Fedotov, sold 95 ordinary and 5 preferred shares of AS Rus Media JSC (the legal entity of the publisher of the Russian version of Forbes magazine) to the venture capitalist Musaev. The amount of the transaction at that time was not officially disclosed. A year later, Fedotov was declared bankrupt, and since 2021 FAF Media has been undergoing a similar procedure.
On August 18, 2022, the Moscow Arbitration Court completely canceled the deal to sell Forbes. As stated in the ruling of the Moscow Arbitration Court, the amount of the transaction amounted to 500,000 rubles. After that, Musaev, Fedotov and AS Rus Media JSC sent appeals to the court. In a statement by the Forbes editors, published on the publication’s website on August 25, 2022, the court’s decision was called “erroneous.” It also noted that the new owner took on the repayment of the company’s huge debts (360 million rubles), paid them in full and brought the company to profit in 2021.
In 2021, the revenue of the legal entity AS Rus Media JSC amounted to 872.3 million rubles, and net profit – 17.9 million rubles, follows from the SPARK-Interfax database. Data for 2022 has not yet been published.
On December 8, the Ninth Arbitration Court of Appeal appointed an independent examination of the value of the transaction. To do this, the court chose ANO Soyuzexpertiza from the three organizations represented at the Chamber of Commerce and Industry of the Russian Federation. The experts, in particular, had to answer the question, what was the estimated market value of a 100% stake in AS Rus Media JSC at the time of the transaction – August 30, 2018.
In its opinion, presented on Tuesday, March 28, at a meeting of the Ninth Arbitration Court of Appeal, Soyuzexpertiza valued the shares of AS Rus Media JSC as of August 30, 2018 at 1 rub. The net assets of JSC “AS Rus Media”, as noted by the representative of the appraiser, amounted to “minus 245 million rubles.”
“According to the results of the forensic examination, it was established that (as a result of the transaction for the sale of Forbes. – Vedomosti) the company lost not the only asset, as the bankruptcy trustee insists, but the only liability that burdened the debtor by 245 million rubles. Therefore, there is no harm (as a result of the deal for the sale of Forbes. – Vedomosti),” Musaev’s representative said in court.
Forbes magazine has been published in Russia since 2004. A subsidiary of the German media holding Axel Springer has been publishing for more than ten years. In 2015, after the adoption a year earlier of a law limiting the share of foreigners in the ownership of Russian media to 20%, the magazine was bought by Alexander Fedotov. In August 2018, he sold it to Musaev.
Mediascope has not counted the average audience of one issue of Forbes in Russia since 2018. From June 2022 to February 2023, the magazine suspended the release of the paper version, but in March 2023 it went back to print. The monthly audience of the Forbes website (desktop and mobile devices), according to Mediascope, in February 2023 amounted to 2.8 million people among Russians over 12 years old.
Estimated value of shares in 1 rub. due to the fact that the transaction on the transfer of ownership of any asset must be paid, says the lawyer of the inter-territorial bar association “Klishin and Partners” Vladimir Entin. “Since the property complex of the Russian Forbes magazine was burdened with debts, it could be transferred to a new owner at a minimal, in fact formal price,” he knows.
The chances of the bankruptcy trustee of FAF Media in the court of cassation will depend on how well the company’s shares were assessed, says Alexander Zhuravlev, managing partner of the EBR law firm: “It is necessary to double-check whether all assets and liabilities were taken into account at the time of the transaction, what was their cost.
If the assessment is carried out correctly, then FAF Media has rather low chances to challenge the decision of the Court of Appeal, Zhuravlev concludes.