Eversheds Sutherland Bitāns represents a client in a historic litigation spanning over 10 years: the court has ordered more than EUR 124 million in damages

By its decision of 18 May 2021 the Senate refused to initiate appeal-on-point-of-law in the case of SIA “REAP” and SIA “Publisko aktīvu pārvaldītājs "Possessor"" against former shareholders of Parex banka Valērijs Kargins and Viktors Krasovickis. Thus, the judgment of the Latgale Regional Court of 25 January 2021 on the reimbursement of more than 124 million EUR in damages and more than 600 000 EUR of legal expenses came into force.

Our office is delighted with the decision which concludes more than 10 years of work on behalf of our clients SIA "Publisko aktīvu pārvaldītājs "Possessor"", SIA "Reap", as well as company in the process of winding up AS "Reverta".

This is the largest quantum of damages ever awarded in Latvia for a claim against shareholders of a company. The case is also a useful future reference for misleading representations and warranties made in a share purchase agreement regarding the financial position of the company at the time of acquisition. This case confirms transferor's responsibility and liability for financial standing of a company to be sold and underlines the importance of good corporate governance and accurate, actual and appropriate flow of internal information, especially in a case of credit institution. The case also concerned a counterclaim for annulment of the relevant liability clauses of the seller that was eventually rejected.

This litigation is quintessential of our team's versatile skills in pre-litigation research in complex legal matters, also involving the audit firm PwC Latvia, a member organization of the PricewaterhouseCoopers network of companies, which made a significant contribution and helped us look at the economic side of the issue, including provisioning and other financial performance, legal issues and the nuances of the transferor's liability. The case is also notable for the amount of complex data and evidence analysed by the court, as well as for the need to determine the status of an external expert report in the proceedings.

The Senate decided that there were no reasons to conclude that the outcome of the judgment under appeal was manifestly incorrect or that the case would be significant to ensuring uniform case-law or development of case-law.

We extend our congratulations and gratitude to our Litigation practice team and every expert involved who helped during these exciting 10 years.

The project was spearheaded by partners Agris Bitāns and Ginta Krūkle, with participation of the entire Litigation practice team at various stages of the case.