Former GNT Owners Sentenced to Prison in UK for Violating Asset Disclosure Order

In a significant ruling that underscores the gravity of violating court orders in international business disputes, Sergiy Groza and Volodymyr Naumenko, the former ultimate beneficial owners of Ukrainian import-export business GN Terminal Enterprises (GNT), have been sentenced to 21 months in prison by Mr. Justice Bryan of the English High Court. The sentence comes as a result of their failure to comply with a worldwide freezing order (WFO) and subsequent asset disclosure order.

The case stems from a US$118 million WFO placed on Groza and Naumenko's assets in January 2023, obtained by Madison Pacific Trust Limited on behalf of GNT's secured lenders, Argentem Creek Partners (ACP) and Innovatus Capital Partners. The WFO was upheld in February 2024 after an unsuccessful challenge by the defendants. In April 2024, an additional disclosure order was issued to ensure compliance with the WFO, requiring Groza and Naumenko to provide detailed information about US$97 million in dividends received over a decade, nominees holding their assets, and the funding of their legal fees.

The sentencing on October 4, 2024, followed a committal hearing on August 30, where Mr. Justice Bryan found Groza and Naumenko in contempt of court for breaching the asset disclosure order. The judge issued warrants of committal, meaning the defendants will be arrested upon entering the United Kingdom. This development marks a critical point in the ongoing legal battle surrounding GNT and its former owners.

The implications of this ruling extend beyond the immediate case, serving as a stark warning to business leaders and beneficial owners operating in international markets. It demonstrates the reach and power of the English courts in enforcing compliance with their orders, even when defendants are based overseas. The case also highlights the serious consequences of attempting to evade asset disclosure and the importance of transparency in financial dealings.

For the creditors, ACP and Innovatus, this ruling represents a significant step forward in their efforts to recover the loans provided to GNT. The US$75 million loan from ACP in 2019 and the US$20 million working capital facility from Innovatus in 2021 remain unpaid, with interest payments having ceased and the loans maturing unfulfilled in December 2021.

The sentencing also sheds light on broader issues of corporate governance and financial responsibility. Daniel Chapman, CEO and founder of Argentem Creek Partners, called for entities working with Groza and Naumenko to cease business relations, emphasizing the importance of standing up for the rule of law. John Patton, Head of EMEA & Asia at Argentem Creek Partners, pointed out the contradiction between the defendants' actions and Ukraine's need for companies to fully pay taxes and support the country's war effort.

This case is part of a larger pattern of legal actions against Groza and Naumenko, including ongoing criminal investigations into alleged fraud and asset stripping. The involvement of associates such as Serbian Dusan Denic and Russian Mikhail Ipatov further complicates the international dimensions of the case, with Denic facing a separate civil fraud case in New York.

As this legal saga unfolds, it serves as a cautionary tale for international businesses and investors. The English High Court's willingness to impose severe penalties for non-compliance with its orders reinforces the importance of adhering to legal and financial obligations, regardless of geographical boundaries. This case may set a precedent for how similar disputes are handled in the future, potentially influencing corporate behavior and international business practices.