ARMA has ceased to manage Morshynska. What awaits the famous brand next
2 April 22:16
The conflict over the management of the seized assets of the well-known Morshynska brand has taken a new turn – ARMA (the National Asset Recovery and Management Agency) has officially terminated the contract with Carpathian Mineral Waters, which had previously acted as the manager. This decision opens a new stage in the history of asset management belonging to one of the largest players in the Ukrainian bottled water market, "Komersant Ukrainian" reports, citing information from ARMA.
What happened?
The termination of the agreement was the result of a number of systemic problems, including legal and procedural barriers. According to ARMA, the key reason was that the law requires managers to coordinate certain actions with sanctioned persons – the actual owners of the seized assets. In the case of Morshynska, it is a business associated with Russian oligarch Mikhail Fridman, a shareholder of IDS Ukraine, the company that owns the brand.
In addition, the process of obtaining a merger clearance from the Antimonopoly Committee of Ukraine proved to be protracted. The lack of timely approval from the AMCU has paralyzed many management processes and jeopardized the effective functioning of the state-owned business.
How the situation will develop in the short term
ARMA has announced the launch of a new procedure for selecting a receiver. Before that, however, the agency plans to conduct an up-to-date valuation of the assets by engaging an independent appraiser. This stage is key, as it allows determining the true value of the assets, their potential for use, and substantiating the conditions for future management decisions.
At the same time, the agency starts collecting market consultations – opinions and suggestions from market participants, potential managers and stakeholders. This will make the selection procedure as transparent as possible, open to competition, and prevent backroom deals.
After the assessment and consultations are completed, the asset will be put up on Prozorro, an electronic public procurement platform, where a new manager will be selected through an open tender.
Why the Morshynska case is important for Ukrainian business
The Morshynska case is an exemplary case that demonstrates how difficult it is to ensure effective management of seized assets in a time of war. On the one hand, government agencies are obliged to respond promptly to evidence of business ties to the aggressor country. On the other hand, the restrictions prescribed by law often paralyze the management mechanism itself. For example, the requirement to coordinate actions with sanctioned persons seems logical in peacetime, but in martial law it turns into a tool for sabotage.
According to Olena Duma, the Head of the ARMA, the solution to this problem lies in the legislative sphere. She called on the Verkhovna Rada to consider and adopt draft law No. 10069 as soon as possible, which will unblock the mechanisms for managing seized corporate rights. It is about the rules that will release managers from the obligation to coordinate their decisions with the owners of assets that are subject to sanctions or are under arrest. This will not only allow for more flexible management, but will also finally start generating real revenue for the state budget.
Context: How Morshynska fell into the hands of the state
IDS Ukraine, which includes the Morshynska brand, was one of the largest bottled water companies in Ukraine. In 2022, after Russia’s full-scale invasion, it turned out that the company’s stake was owned by Mikhail Fridman, an oligarch with close ties to the Kremlin elites.
In June 2022, IDS Ukraine’s assets were seized. After that, they were transferred to the state in the form of corporate rights, real estate, equipment, and brands. The ARMA was responsible for finding a temporary manager, and in November 2022, it signed an agreement with the Carpathian Mineral Waters company. It was expected that this would ensure the continuous operation of the enterprise, save jobs and fill the budget. However, due to the problems described above, the cooperation turned out to be unviable.
Will production stop?
At the moment, the production of Morshynska TM products has not been stopped. However, as the ARMA recognizes, further inaction or legislative delays may create risks for both the company and the market as a whole. The trademark has high recognition, stable sales, and operating production facilities. However, without a designated manager, the company cannot manage funds, enter into contracts on new terms, or make strategic decisions.
The problem is bigger than just one case
The situation with Morshynska is just one of dozens of examples where seized assets lose their effectiveness due to legal traps. Many businesses associated with citizens of the aggressor country have been seized, but their further management faces the same difficulties.
ARMA, in its statement, actually appeals to MPs and the government with a demand: if the state wants the seized assets to work for the economy and not lie as dead weight, it should urgently change its approach. Otherwise, all the high-profile confiscations may turn out to be nothing more than symbolic gestures with no economic effect.
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