Bakala and Kadas do not have to return CZK 12 billion of dividends, British court ruled.
Businessmen Peter Kadas and Zdeněk Bakala, former owners of NWR, were victorious in court this week. The High Court of Justice in London decided they do not have to return dividends, which their company CERCL Mining paid itself in 2011 and 2012 from NWR. Back then, it came to CZK 12 billion. Kadas and Bakala, who owns Economia then owned 63.65% share in the company; the rest was being traded at the stock exchange.
CERCL turned to the English court for two reasons. On one hand, both entrepreneurs wanted to protect themselves so the court-appointed British liquidator of the bankrupt NWR would not be able to demand the above mentioned billions. However, the second reason is the Czech link of the entire story.
NWR’s only asset was the OKD mines, which went bankrupt and had gone through insolvency. Their insolvency administrator Lee Louda accused both entrepreneurs and their companies of paying excessive dividends to themselves, by which they led the company to insolvency. Due to that, he asked the court to rule that the approval of dividends from 2011 and 2012 was legally ineffective.
CERCL Mining claims that due to the local jurisdiction of both CERCL and NWR, the courts of England are the proper place for determining the validity of these dividends. “The evidence before the court was entirely clear that NWR declared and paid valid dividends. OKD and Lee Louda had the opportunity to seek their remedies in England, the proper forum, which they failed to do. They also had the opportunity to participate fully in this case but didn’t. They clearly are not comfortable arguing in a court outside the Czech Republic that a profitable business should not pay a dividend,” said Derk Stikker, a director of CERCL, in a press statement.
However, the English judge is not as unequivocal in his ruling. In his decision, he wrote that the Czech court will have the benefit of the English court’s view on the lawfulness of the (English law governed) NWR Dividends. He does not comment on the matter much further.
Lee Louda is staying silent on the matter. “I will not comment about ongoing cases,” he says. According to a source close to HN, however, they are not too concerned about the English court’s ruling. “Our actions were not filed in England but rather in the Czech Republic. This means that the decision of the English court has practically no meaning in relation to the Czech disputes,” he says.