The impressive salary of the bankruptcy administrator of “Arvi fertis” A. Valaitis was stumbled upon: he receives as much as 18.5 thousand. euros | Business

The “Arvi” business empire founded by Marijampolė businessman Vidmantas Kučinskas collapsed, but scandals still accompany the bankrupt companies of this group.

Currently, due to the bankruptcy, which was recognized by the court this year as intentional, one of the small creditors of the liquidating fertilizer company “Arvi fertis”, the company “Belor”, has been fighting for a year for the amount of monthly salary paid to the insolvency administrator Aurimis Valaičius.

“Belor” lawyer Laurynas Lukošiūnas 15 minutes claims that the insolvency administrator, who receives a huge salary, together with the big creditor “UHB Agro” who voted for such a decision, allegedly profits at the expense of the company “Arvi fertis” and the rest of its creditors.

According to L. Lukošiūnas, in January 2021, at the meeting of creditors of “Arvi fertis” it was decided by the vote of the majority of creditors that the monthly salary of the insolvency administrator will reach 20 minimum monthly wages (MMA), including all taxes.

During that time, MMA has risen several times – and with it the salary of A. Valaitis.

For example, the monthly salary of the insolvency administrator reached 16.8 thousand last year. euros “on paper” (10.2 thousand “in hand”), and this year due to the increase in MMA, it has increased even more and currently amounts to almost 18.5 thousand. euros (11.2 thousand euros “in hand”).

Belor’s lawyer is indignant that such a high salary is being paid for – it is not clear, because the liquidation procedures of Arvi fertis are coming to an end, most of the company’s assets have already been sold.

“It is an incomprehensible situation – a person receives thousands, but in reality he cannot explain what kind of work he does. What to do in a company where most of the assets have been sold, there is no activity, there is no movement, except for all kinds of disputes, which are separately administered? Yes, cases are ongoing, but he takes a separate payment for all cases, legal matters,” L. Lukošiūnas wonders.

The lawyer is convinced that the salary should depend on the workload and incurred costs. For example, if the bankruptcy of a large company is being administered, there can be a lot of work: the insolvency administrator has to organize the sale of assets, hold meetings of creditors, analyze many documents, and if they are missing, contact former managers. In addition, in some cases it is necessary to ensure the continuity of the company’s activities, for example, production.

“Then the salary can be 10 thousand. euros, and 20 thousand euros. But when bankruptcy, like now, has been going on for several years, all the assets have been sold, no new actions are taken, creditors’ meetings are held maybe once a year. So what do you do every month? We offered to pay 500 euros or 1000-1500 euros per month. Because does a person really devote his whole working day to this company?” – the lawyer was indignant.

In addition to the bankruptcy of “Arvis fertis”, A. Valaitis manages more bankruptcy processes. According to the Audit, Accounting, Asset Valuation and Insolvency Management Service (ATVN), A. Valaitis currently administers a total of 40 insolvency procedures. It is true that 11 of them are bankruptcies or restructurings of companies, and most of them are bankruptcies of natural persons.

The small creditors have been trying to challenge the salary of this amount for some time, the dispute has reached the court – however, the decision regarding the salary determined by the majority of the creditors was not overturned either in the court of first instance or in the court of appeal. The court of first instance noted that the remuneration can be changed by the meeting of creditors.

In mid-February, the insolvency administrator supervising AVNT also received a complaint about A. Valaitis’s actions and salary amount, but its head, Audrius Linartas 15 minutes claimed that she has not yet made a decision on whether to start an unscheduled inspection of A. Valaitis.

A. Valaitis denies the amount of the salary, although the documents show otherwise

Aurimas Valaitis, the insolvency administrator himself, 15 minutes when asked about the salary he receives, he denied that he receives 20 MMA for the bankruptcy administration of “Arvi fertis”, ie 18.5 thousand. euro salary.

“The amount stated by the small creditors, as you mentioned, does not correspond to reality – the administrator does not receive such a salary. The second thing is that your small creditor has been raising this question and has been raising it for probably a year now – more than once he has initiated the consideration of the question regarding the review of administration costs at the meeting of creditors, and the questions are being addressed and resolved at the meeting, later in court, and now also at the supervisory authority that received the complaint.” , – claimed A. Valaitis.

When asked to clarify what salary he receives for the administration of this bankruptcy, A. Valaitis refused to do so.

“The information is incorrect, and information about the bankruptcy process is provided only to a very narrow circle of persons – only to the participants in the bankruptcy process. Donate, I won’t comment on anything else”, – A. Valaitis was not inclined to speak.

However, it seems that the bankruptcy administrator says it is not true. 15 minutes the journalist received in 2021 January 27 the minutes of the meeting of creditors, which actually provides for a salary of 20 MMA for the bankruptcy administrator. The fact that A. Valaitis receives such a salary for Arvi fertis insolvency administration, 15 minutes it was also approved by the Audit, Accounting, Asset Valuation and Insolvency Management Service, which supervises the activities of insolvency administrators.

“According to the data available to AVNT, the issue of compensation for Arvi fertis insolvency administrator Aurimis Valaitis has been resolved by Arvi fertis in 2021. January 27 at the meeting of creditors, on item 5 of the agenda, point 8, by which it was decided to determine the administrator’s monthly salary of 20 MMA (including all payable taxes), including 10 MMA salary for the performance of economic and commercial activities, for the period from 2019. July 11 until the day of changing the decision of the separate meeting of creditors on the administrator’s salary,” the service’s response reads.

January 27, 2021 in the minutes of the meeting of creditors, it is noted that creditors Swedbank, Belor, bailiffs Laurynas Lukšys and Asta Lukšienė, as well as JSC Alfa-Bank and Dreymoor Fertilizers Overseas PTE LTD, did not approve of such payment.

The minutes also include Swedbank’s note that the salary proposed for the bankruptcy administrator “is unreasonably high, does not correspond to the possible scope of the bankruptcy process”, and also “disproportionately increases the costs of bankruptcy administration and, accordingly, reduces the creditors’ ability to recover as much of the debts as possible”.

And how much do insolvency administrators typically get paid? According to AVNT, the average duration of the bankruptcy process is about 2 years, and the average compensation in 2023 was 5.2 thousand. euros for the whole process.

After all, Audrius Linartas, director of the service 15 minutes argued that it was “not very possible to average out the remuneration of insolvency administrators, as most of those proceedings are very small or non-asset-based companies”.

“If there are almost 1,000 completed processes in 2023, I would guess that 800 of them are so-called bankrupt companies. In such cases, the administrator could not receive anything at all, because there was nothing to pay from. Or recover from managers, culprits, if the bankruptcy, for example, was intentional – usually the administrator receives 1-3 thousand. euros for the administration of such a process. That average does not symbolize anything too much”, explained A. Linartas.

He reasoned that creditors have an interest in recovering as much property as possible, so remuneration is not determined solely by the wishes of the insolvency practitioner. However, he did not undertake to evaluate whether 18.5 thousand A. Valaičius’ salary in the amount of 10,000 euros is fair.

“I would not take the decision, because the salary was appealed to the Vilnius District Court, it was examined and the court is more authoritative to say – it did not cancel that salary, that was apparently the basis for awarding it,” said A. Linartas.

Supervises a total of 40 bankruptcies

According to the latest AVNT data, A. Valaitis administers as many as 40 insolvency cases in total. However 15 minutes asked the insolvency administrator was not inclined to open up about how much time a week he spends on the Arvi fertis case.

“Your question is interesting – time is constantly allocated to this case, because the administrator receives questions all the time”, retorted A. Valaitis.

And when asked how he finds time for more than 30 other cases, A. Valaitis claimed that most of them are bankruptcy proceedings of natural persons. In addition, he added that he has a company that employs more than one person. According to “Sodros”, 7 employees work in the company “Corporate Bankruptcy Administration and Legal Services Office” managed by A. Valaitis.

“There is more than one person working, many of the procedures themselves are performed by other people,” he said.

A. Valaitis added that the legal entity appointed as the administrator of most of these cases is his company. However, on the website of the AVNT service, it is indicated for all 40 bankruptcies that the insolvency administrator is A. Valaitis, and not the company “Office of Corporate Bankruptcy Administration and Legal Services”.

“Of course, I work on all of them (insolvency procedures – ed. note), my other colleagues – lawyers and accountants – also work and perform the functions assigned to them,” said the insolvency administrator.

A. Valaitis also objected to the statement of Belor’s lawyer that there are almost no jobs left in the Arvi fertis company – according to the insolvency administrator, not all assets have been sold yet, and there are many disputes in court.

“If the company is not deregistered, and this company is not deregistered from the Register of Legal Entities (JAR), the procedures that need to be completed in order to deregister the company from the JAR are carried out.

The second thing is that there is enough litigation going on that it is complicated enough. And by the initiative of your small creditor, most of those disputes are started.

We sell property, we argue in court, we answer creditors’ questions and perform all other procedures that are provided for in the Law on Insolvency of Legal Entities and other legal acts,” explained A. Valaitis.

Unfair agreement viewed

The insolvency administrator for Belor has already stumbled before – the small creditor previously sought the dismissal of A. Valaitis from the position of insolvency administrator of Arvi fertis, but the court, rejecting this request, argued that the right of initiative regarding the dismissal of the insolvency administrator is granted only to creditors who have at least half of the requirements for the bankrupt company.

Meanwhile, L. Lukošiūnas claims that Arvi fertis’s insolvency administrator A. Valaitis has already been recognized as dishonest during the liquidation procedures, concluding illegal agreements with Arvi fertis’ majority creditor UAB “UHB Agro”.

7.5 million contracts concluded in 2021 were declared invalid in the courts. EUR transactions regarding the sale of property and settlement of mutual claims between “Arvi fertis”, real estate rental company “Marijampolės NPK” (former “Antes”) and consulting company UHB.

To 15 minutes A. Valaitis did not agree to answer the question of how he assesses his responsibility as an insolvency administrator regarding the invalidation of the 7.5 million euro transaction determined by the court.

“This question has already been answered by your colleagues. <...> I won’t repeat this again, look at my previous comments,” the insolvency administrator was asked to comment.

Vilnius District Court initiated the bankruptcy case of “Arvi fertis” in May 2019, at that time its obligations to creditors exceeded 18 million. euros. Currently, the total amount of approved creditor claims in the company “Arvi fertis” exceeds 50 million. euros.

Bankruptcy cases have already been filed for the companies of the Arvi group managed by V. Kučinskas, Marijampolės Arvi, Arvi kalakutai and Marijampolės pasarai, and the courts did not allow the businessman himself to declare personal bankruptcy.

V. Kučinskas has indicated that his debts to creditors amount to 61.8 million. euros, and his monthly income is 1.5 thousand. euros. The businessman owes Alfa Bank the most – 38.6 million. euros, almost 10 million EUR – Sberbank of Russia, Belor – 4 million. euros.