. Last Updated: 07/27/2016

Court Says Firm's Sale Not Legal

A Moscow arbitration court has ruled that a tender in which a British company received a stake in a Moscow garment factory was illegal, marking yet another setback for foreign investors that team up with Russian companies.

The decision, handed down Wednesday, said the British company Illingworth Morris Limited illegally received a 49 percent share in the Bolshevichka factory, which it acquired in a Moscow privatization auction last November.

"Obviously, Illingworth Morris is disappointed by the Arbitration Court's decision," the firm said in a prepared statement Thursday, adding it will appeal.

Illingworth "believes that the unprecedented renationalization of one of Russia's finest light manufacturing facilities will not serve the interests of Bolshevichka, the collective, Moscow or society at large," the statement said.

As part of the deal, Illingworth was to invest $5.5 million to revamp and modernize the Bolshevichka company, but to date no money has been invested as both sides claim foul.

The Moscow prosecutor's office brought the case to court March 20 against the Moscow Property Fund on behalf of the Bolshevichka factory, which analysts say is one of the few competitive garment factories in Russia.

Bolshevichka officials last month doubted whether Illingworth would invest the $5.5 million. But Illingworth claims Bolshevichka officials, who could not be reached for comment Thursday, did not want the money because they won't accept partial foreign ownership.

A text of the proceedings supplied by Illingworth, a State Property Committee representative said foreign companies "act in the market, in this particular case [Illingworth], ... like unleashed dogs."