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Armenia’s largest supermarket chain on Friday accused its competitors, among them a government-linked tycoon, of foul play that led to bankruptcy proceedings launched against it by a court in Yerevan late last month.

The company, Star, has been in crisis for the past two years, running up substantial debts to its wholesale food and beverage suppliers. Some of them have cut back on their supplies, resulting in a dramatic shrinkage of the variety of products sold at its once popular food stores mainly located in Yerevan.

The private retailer claimed late last year to have begun overcoming its financial troubles through staff layoffs and other restructuring. Nevertheless, it was taken to court by one of its suppliers, the Yerevan Brandy Company (YBC). Star owes 71 million drams ($170,000) to the YBC.

A Yerevan court declared Star bankrupt on July 26, appointing an interim financial administrator for the company. The ruling was formally published and took effect on Friday. Star plans to appeal it.

Arman Sargsian, the bankruptcy administrator, made clear that he will not rush to sell off Star’s assets with the aim of clearing the debts to the YBC and other creditors. He argued that the recent ruling could be overturned by the Court of Appeals. Also, he said, Star’s restructuring program could convince the creditors to agree to a further postponement of the debt repayments.

Meanwhile, a top Star executive, Lida Kocharian, blamed rival supermarket chains for her company’s woes. In written comments to RFE/RL’s Armenian service (Azatutyun.am), she said that they buy and sell key foodstuffs at practically the same prices.

Armenia - Samvel Aleksanian, a businessman and parliament deputy, attends an election campaign rally in Yerevan's Malatia-Sebastia district, 16Apr2012.

Armenia - Samvel Aleksanian, a businessman and parliament deputy, attends an election campaign rally in Yerevan's Malatia-Sebastia district, 16Apr2012.

Kocharian appeared to specifically point the finger at Star’s principal competitor, the Yerevan City network of Samvel Aleksanian, one of Armenia’s richest men close to the government. Yerevan City has expanded significantly in recent years.

Other companies owned by Aleksanian have long controlled lucrative imports of sugar, cooking oil, and other basic foodstuffs to the country. Critics accuse him of capitalizing on his government connections to establish de facto monopolies.

Yerevan City and another, smaller retailer, SAS, declined to comment on Star’s claims.

Babken Tunian, an economic analyst, believes that while Star has suffered from poor management and a lack of financial prudence, its complaints against the competitors and Aleksanian in particular are not unfounded. He said that Star has to buy basic foodstuffs from Aleksanian and cannot find alternative suppliers or import them on its own.

“As far as some products are concerned, there are monopolies that are in a position to undermine competition,” Tunian told RFE/RL’s Armenian service (Azatutyun.am).

Aleksanian was widely blamed by government critics early this year when the French retail giant Carrefour put on hold plans to open a supermarket in Yerevan. The food store was expected to be located at a newly constructed shopping mall owned by a Russian-Armenian billionaire.

Reports in the Armenian press accused Aleksanian of using his government ties to thwart Carrefour’s entry into the Armenian market. Both the tycoon and the Armenian government denied that. The government insisted that it is interested in having the world-famous retailer set up shop in Armenia.
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