Two iconic companies from different sectors, but with global operations, are parting with their Russian assets – Hugo Boss and JP Morgan Chase. And while with the first company it is a deal, although announced, the second was overtaken by seizure after a court decision.
Here are the circumstances of both cases.
Court ruling against America’s largest bank.
A Russian court has ordered the seizure of JPMorgan Chase assets in the form of savings bank accounts in Russia. This was reported by Reuters, citing court documents in a case filed by state-owned bank VTB. With it, she tries to recover part of her funds blocked abroad.
Last week, JP Morgan Chase filed a lawsuit against VTB in New York to stop its attempts to recover $439.5 million from a blocked account, after Russia’s invasion of Ukraine began in February 2022 and after sanctions were imposed on VTB .
JPMorgan Chase declined to comment on the Russian court’s decision. VTB did not comment after the court decision. The Russian state bank previously declined to comment on its legal disputes with JPMorgan Chase.
The decision of the Arbitration Court of St. Petersburg and Leningrad Region is from April 22. According to him, the ordered seizure affects all funds in bank accounts of JP Morgan in Russia, including correspondent accounts and those opened in the name of a subsidiary. The court announced that it did not confiscate securities and property held by JP Morgan funds or the jpmorgan.ru domain,
In a complaint filed in federal court in Manhattan earlier this month, JPMorgan described VTB’s attempt to repatriate the money to Russia as a “blatant breach” of their New York dispute settlement agreement.
America’s biggest bank said US law bars it from “forgiving” $439.5 million, and VTB, Russia’s second-biggest bank, will seek to seize its assets abroad if it prevails in the case in Russia.
VTB’s prospects in this case are good, with Russian courts having awarded benefits to at least six other Russian banks in disputes with US and European banks that were required to comply with statutory sanctions.
The fashion guru retires from Russia
Hugo Boss turns a new page by agreeing to sell its Russian business to its trading partner Stockmann. The famed German fashion goods company announced on Wednesday, the deal ending its presence in Russia just over two years after shutting down operations there.
Hugo Boss, along with many other retailers, suspended its business in Russia soon after Moscow sent its army into Ukraine in February 2022. It also stopped e-commerce of its goods in the Russian market and stopped advertising, Reuters noted.
The Russian State Commission on the Sale of Foreign Assets has approved the deal, Interfax reported, citing Deputy Industry and Trade Minister Viktor Yevtukhov, with one of the conditions being the preservation of all jobs.
Hugo Boss did not disclose the financial terms of the deal. Russia requires foreign companies to sell assets at a discount of at least 50%.
“As a result of the agreement, Hugo Boss will no longer be present in Russia with its own legal entity,” Hugo Boss said in a statement.
The deal, which Hugo Boss noted is still subject to approval by a European regulator, is expected to close in the third quarter of this year, Interfax reported.
“With regard to our wholesale business, we fulfilled our contractual obligations to our partners,” Hugo Boss said. “In this context, Hugo Boss complies and has complied with the EU sanctions in force at all times.”
Stockmann, the buyer of Hugo Boss assets, is a Finnish retailer popular in Finland, Estonia and Latvia. There are more Stockmann-branded department stores in Russia, but they are owned and operated by Reviva Holdings, with a license to use the brand.
In 2015, Stockmann made the decision to sell its business in Russia to Reviva Holdings, which still owns the company to this day. Now the company has 12 department stores, mostly in Moscow and St. Petersburg.
“We saw the collapse of the Soviet Union, several coup attempts, tanks in the streets, and yet our stores remained open and business was going,” former CEO Hanu Pentila told Reuters in 2014, as quoted a year ago by bne IntelliNews.
