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. Last Updated: 07/27/2016

Promstroibank's House for Sale

VedomostiPromstroibank's building at 13 Tverskoi Bulvar was to go up for auction Monday.
Guta Bank has pushed forward with plans to acquire bankrupt Promstroibank's building on Tverskoi Bulvar at lower than market prices, said representatives of minority shareholders in Promstroibank.

The representatives said auction conditions had been set to favor Guta Bank, which controls the main share of Promstroibank's debt.

Promstroibank's committee of creditors, which commissioned the company managing the auction, is almost completely made up of representatives of the Gosinkor Holding, of which Guta Bank is a part.

On the committee's instruction, Promstroibank's auction manager Vladimir Bovkun commissioned Vertikal and Co. on Feb. 7 to hold the auction of the 19,422 square meter building and the attached clinic (1329 square meters) at 13 Tverskoi Bulvar.

Vertikal published an announcement of the auction on Feb. 9 in Vyorsty, a newspaper that is not popular in financial circles.

Participants were given until Feb. 15 to register, and according to the announcement, bidding was to begin Monday. The two buildings were to be auctioned off in a single lot with a starting price of $40 million.

Participants were to deposit 50 percent of the bid as a down payment in a Guta Bank account between March 4 and 6.

A representative of one of Promstroibank's non-Guta Bank creditors found out about the actions only when contacted by Vedomosti. He said Promstroibank's auction manager was aware of the existence of another contender for the building, but that contender had not yet heard of the auction. The representative declined to give the contender's name.

Before Gosinkor Holding bought a large chunk of Promstroibank's debt, the main contender for the building was considered to be the Russian State Bank for Development, which rents the central part of the building.

The Bank for Development's press service declined to comment on the situation because it had not planned to "participate in the auction."

At the same time, a source familiar with the situation said the auction could be declared illegitimate because none of the potential buyers would have guessed to look in Vyorsty to find out about the auction, and secondly, nobody would be prepared to pay more than $20 million for the building. The source said this is what organizers of the auction want. By law, the auction manager has to hold the auction twice. If the auction is declared illegitimate both times, the property can be sold directly, which is what, the source said, Guta Bank is counting on. If it were able to buy the property directly, it would be able to buy the building for lower-than-market prices.

The auction's organizer receives 3 percent ($1.2 million) of the starting cost regardless of the outcome. Vedomosti was not able to confirm whether Vertical and Co. is related to Guta Bank, but there is a developer company called Vertical within the Gosinkor Holding. One of its founders is Yury Gutin, also a founder of Guta Bank.

Gosinkor Holding refused to comment on the auction.