Courts to decide fate of tender to manage Morshynska assets: why this is a predictable outcome of ARMA’s actions
The Asset Recovery and Management Agency’s (ARMA) tender to select a manager for the corporate rights of the IDS Ukraine group of companies, which was supposed to exemplify the state’s new approach to complex assets, did not end as the Agency itself sought to portray it. Instead of a transparent selection of a qualified manager, we now have a new court case, questions about the economic rationale behind the bids, four companies lacking adequate resources among the five bidders, and the central mystery: who will actually stand behind the nominal manager of a multibillion-hryvnia business. And this legal saga is only beginning.
ARMA failed to seize the opportunity
The weaknesses of this selection process were obvious even before it concluded. Prospective bidders openly highlighted the legal and economic risks of transferring IDS Ukraine, the unrealistic financial obligations imposed on the manager, and the conditions under which it would operate. Some prospective bidders published these concerns directly as questions to ARMA on the Prozorro platform.
A separate concern involved the legal authority to dispose of the group’s corporate rights, given the wording of the court orders. The updated legislation allows ARMA to manage assets where the owner is prohibited from both disposing of and using the property. In the case of IDS Ukraine, however, the court orders restrict only the transfer of the corporate rights, leaving the right to use them intact. This is far from a technical detail, as it concerns the legality of the procedure itself.
Instead of first resolving these contradictions, however, ARMA proceeded with the process. As a result, the announced tender failed, as only one bidder made it through. This should have signalled to the Agency that the problem might lie in the management terms themselves rather than a lack of market interest.
The logical response would have been to revise the terms, clarify the management model, verify the financial calculations, and consult prospective managers again. The Agency had a real opportunity to restart the process, but used it largely for self-promotion and announced a new selection process without addressing the fundamental shortcomings.
Only one bidder of comparable scale
It was at this stage that perhaps the biggest problem with the second tender emerged. ARMA presented the participation of five bidders as evidence of strong competition. But the number of bids alone does not mean there are genuine contenders capable of managing an asset of this scale.
Four of the five companies had minimal staffing and resources. Against this backdrop, Yuvileinyi Meat Processing Plant LLC appeared to be perhaps the only bidder whose scale of operations came anywhere close to that of the IDS Ukraine group of companies.
The most telling example was Prioritas Legal Bureau LLC, which ARMA ultimately selected as the winner. The company has a charter capital of UAH 1,000, three employees, and a profit of approximately UAH 8,400 for 2025. Yet it is seeking to manage the corporate rights of a group that owns one of Ukraine’s largest mineral water producers.
This raises a very practical question: how exactly does a company with three employees and financial figures like these intend to manage a business of this scale?
Moreover, as MP Anastasiia Radina noted in her own investigation, there are fundamental questions about the procedural documents submitted by Prioritas LLC on Prozorro that ARMA’s committee simply ignored. In particular, an uploaded acceptance and transfer certificate dated 1 December 2024 refers to a power of attorney dated 1 January 2025, a document from the future. In Radina’s view, this is a direct indication of forgery rather than an ordinary typo.
In addition, Prioritas substantiated its management experience with contracts between affiliated companies owned by a husband and wife, while its letter of recommendation was signed by the director of a company wholly owned by Prioritas itself. Although the submission of questionable information constitutes direct grounds for disqualification, ARMA allowed the bidder to participate in the auction.
But the problem here extends even beyond Prioritas’s professional capacity. With several companies possessing minimal resources participating in the tender, ARMA should have examined their beneficial owners, related parties, sources of financing, actual staffing capacity, and links to other business entities with particular care. After all, the nominal manager and the actual centre of decision-making may be located in different offices.
This creates a much more serious threat: effective control over a strategic asset could end up in the hands of financial and industrial groups interested in redistributing IDS Ukraine’s cash flows. Such entities can operate through so-called shell companies from which the state would be unable to recover anything in the event of losses.
There is no direct evidence of preparations to siphon off funds, but the possibility of such a conflict of interest should have been the primary focus of ARMA’s scrutiny. The committee responsible for managing complex assets should have assessed the documents thoroughly and comprehensively, rather than treating the assessment as a formality. This was particularly necessary given that, after the list of bidders was disclosed, a series of media investigations appeared concerning the actual beneficial owners of each participant. Instead, the Agency hastily admitted all the candidates to the auction.
In particular, Anastasiia Radina highlighted an entire network of corporate connections behind the modest legal bureau. Through a law firm of the same name, Prioritas’s management team signed agreements with Kombinat Plus LLC (the manager of October Palace), which is owned by Atlas Weekend founder Dmytro Sydorenko. His business partner is Yaroslav Pakhalchuk, head of 1+1 Media, who, according to registry records, jointly owns Kvartal TV LLC and the British company Global Media Trade Ltd with the notorious Tymur Mindich. Although these records do not constitute direct legal proof of ownership, the chain of related parties established by the documents is clear.
Anastasiia Radina also pointed to the possible use of similar schemes at other assets managed through ARMA. In particular, during the management of October Palace, the building was subleased to companies established on the same day whose founders, employees, and addresses matched those of Prioritas LLC. As a result, most of the profit ended up in private companies, while the state received only paltry guaranteed payments, an arrangement now under investigation by the National Anti-Corruption Bureau of Ukraine (NABU).
The initial bids submitted in the tender to manage Morshynska’s assets ranged from 30% to 80%, but after the auction, the final bids fell to 0.01% for Ukrkapital, 0.9% for Prioritas, 1% for Alians D, 5% for Redi-Invest, and 10% for Yuvileinyi. A fall in bids from 80% and 42% to 0.01% and 0.9% can hardly be described as ordinary competition.
The interpretation of the financial bids also raises serious doubts. When Ukrkapital provided its explanation for the minimal fee, ARMA rejected it. Prioritas likewise provided no detailed calculations, promising to work out the economics only after taking over at the company. This time, however, the tender committee deemed those arguments sufficient for reasons that remain unknown.
An obvious contradiction arises: why did ARMA reach opposite decisions under the same circumstances and in the absence of calculations? This raises legitimate doubts about the tender committee’s impartiality.
The involvement of Serhii Herman, presented as Prioritas’s lead industry expert, is also questionable. His track record includes running the Rosynka plant, a tenure that ended in the company’s financial collapse. Entrusting a strategic market leader to a manager with such a reputation should have immediately raised concerns among officials. Instead, an absurd situation has emerged: the larger the asset under management, the more superficially ARMA assesses the prospective manager’s capabilities.
Anastasiia Radina stressed that, at the time of the tender, Herman was a co-owner and the serving head of the Rosynka plant, which produces beverages and is a direct competitor of Morshynska. The law explicitly prohibits involving competitors in the management of seized assets because of the risk of insider information leaking and the asset’s market position being undermined. In her view, Serhii Herman’s appointment appears to be a formal attempt to circumvent this statutory prohibition.
The first, but not the last, court case
The legal challenge to ARMA’s decision to select Prioritas as the winner, brought by Yuvileinyi Meat Processing Plant LLC, looks set to mark an interim conclusion to this story. The court granted interim relief, prohibiting ARMA from signing a management agreement with Prioritas or formalising the transfer of the asset pending resolution of the dispute.
This situation raises a paradoxical question: why was this lawsuit the first and only one? Given the number of contentious issues that had accumulated even before the auction, legal proceedings should have begun much earlier.
Potential grounds for a legal challenge extend beyond the final selection of the winner. They include the legitimacy of the asset transfer model itself, discriminatory selection criteria, the procedure for admitting individual bidders, the assessment of their documentation, the analysis of financial calculations, and the committee’s manifestly selective decision-making.
For this reason, the current court case could well become just the first in a series of further legal challenges, with serious implications for the state. When the selection of a manager for assets worth billions of hryvnias begins with legal conflicts, proceeds with the involvement of companies lacking adequate resources, is accompanied by abnormal undercutting of bids, and ends with a court order blocking the process, the problem can no longer be reduced to a private dispute between two bidders. It represents a systemic deterioration of the procedure itself. Moreover, the court injunction undermines the announced outcome: ARMA has named a winner but is effectively unable to transfer the asset to it.
Ultimately, a reasonable question arises: would it not have made more sense to address all the legal and economic concerns from the outset, and only then launch a tender for one of the most valuable assets at the state’s disposal?
The IDS Ukraine case exposes shortcomings not so much in the winning bidder as in ARMA’s approach to managing complex assets. Despite knowing about the legal and economic risks, the Agency reopened the selection process without resolving the key problems. Today, the central mystery concerns not the name of the future manager, but ARMA’s motives for holding a tender fraught with risks, a questionable pool of candidates, anomalous bids, and no clear understanding of who would actually control a multibillion-hryvnia business. When transferring such companies to a manager, the state must know exactly who will control the cash flows and bear responsibility for preserving the value of the assets.
To stop the practice of managers profiting from state assets while paying nothing or only negligible percentages into the state budget, Anastasiia Radina sent formal requests to ARMA and the government demanding a legal assessment of the uncovered facts.
Against this backdrop, the Agency’s frantic haste is particularly puzzling. The High Anti-Corruption Court (HACC) has reached the final stage of proceedings concerning the confiscation of the sanctioned stake in the holding company in favour of the state. The court’s ruling will most likely render ARMA’s entire procedure pointless, and the tender will be cancelled.
