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Ellex Klavins Successful for Latvian Ministry of Finance in Claim Against Parex Banka

Ellex Klavins Successful for Latvian Ministry of Finance in Claim Against Parex Banka

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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.