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. Last Updated: 07/27/2016

Ilim Pulp: Court Overturns $95M Decision

A Kemerovo court presidium on Monday overturned the $95 million decision against leading pulp and paper holding Ilim Pulp Enterprises that led to it losing a 61 percent stake in its flagship mill, the company said.

The original case, brought on April 25 by a super minority shareholder named Sergei Melkin, accused Ilim Pulp of violating the terms by which it privatized the Kotlas Pulp and Paper Mill in the northern Arkhangelsk region. Melkin sought 3 billion rubles ($95 million) in damages.

As a result of the decision, a 36 percent stake and a 25 percent stake belonging to Ilim Pulp were sold off and eventually acquired by aluminum tycoon Oleg Deripaska's industrial holding Base Element and St. Petersburg banker and former Ilim Pulp shareholder Vladimir Kogan.

Deripaska and Kogan later announced plans to form a forestry holding.

According to Ilim Pulp, the presidium ordered a retrial after a protest submitted by Kemerovo prosecutor Alexander Khalezin.

The protest outlined a number of violations committed by the judges during the case, including Ilim Pulp's complaint that it was notified neither of the proceedings nor the decision in time to defend itself or file an appeal.

In addition, the prosecutor argued that the court did not prove direct injury to the plaintiff, Ilim said.

Neither the court nor Base Element could be reached for comment Monday.

Ilim Pulp's lawyer in the case, Derek Bloom of Coudert Brothers, said the court should provide a written decision to both parties within two days and that he expects the retrial will be held in Kemerovo.

"This story has broad importance," Bloom said. "This really could cause chaos in that all major Russian companies could have questions raised about their privatizations. The legal theory here would destabilize many leading Russian companies."

In a 1997 probe, the Audit Chamber uncovered several violations in the privatization of the Kotlas mill, as well as other forestry companies.

Ilim Pulp contends that it addressed the problems and was cleared of any wrongdoing by the Audit Chamber and the Federal Property Fund in subsequent audits and reviews.

The presidium also overturned a 5 billion ruble decision in favor of another super minority shareholder in another Ilim Pulp subsidiary, the company said.