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One of Russia's largest cosmetics retailers Arbat Prestige could face bankruptcy
One of Russia's largest cosmetics retailers Arbat Prestige could face bankruptcy being hit by a new 1.59-billion-ruble ($65-million) debt claim, a Russian business daily said on Monday.

Kommersant said the suit against Arbat & Co, which runs the chain of Arbat Prestige stores, was lodged by Capital Estate, which is the cosmetics holding's subsidiary, on Friday. The move could be preparation for voluntary bankruptcy proceedings.

Claims by creditors against the retailer have been snowballing since its key shareholder and General Director Vladimir Nekrasov was arrested on suspicion of failing to pay 50 million rubles ($2 million) in taxes in January, the paper said.

Creditors had filed 19 debt claims with Moscow's arbitration court for a total of 950 million rubles (about $39 million), the paper said.

"Capital Estate was a guarantor of Arbat & Co's [2006] bonded loan, which it has repaid, and has the right to call in the sum from the company. Capital Estate is now trying to receive court confirmation of the debt," Nekrasov's lawyer Alexander Dobrovinsky told the paper.

The paper quoted analysts as saying the suit filed by a friendly creditor could mean the company may initiate bankruptcy proceedings in the near future.

"The suit is probably needed to launch bankruptcy proceedings and protect the company against involuntary bankruptcy," Grigory Chernyshov, of Yegorov, Puginsky, Afanasyev and Partners law firm, told the newspaper.

"The subsidiary is trying to get court confirmation of the debt, which will make it difficult to challenge. This is normally done to get control of the bankruptcy process," Chernyshov said.

Echoing the comment, Kirill Nam of the Forum law firm said a company with large debts will often resort to bankruptcy proceedings: "Normally a company secures friendly creditors that are in a position to gain control say at a creditors' meeting before a petition for bankruptcy has been filed."

Lawyer Dobrovinsky said Arbat & Co is not planning to apply for bankruptcy proceedings at the moment. The company's current general director, Roman Khomenko, has been unavailable for comment, Kommersant said.


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