JPMorgan speeds up sale of Russian oligarch’s megayacht

Axioma was seized by Gibraltar authorities in March after JPMorgan said its alleged owner, Dmitry Pumpyansky, had waived the terms of a $20 million loan.

The 72.5 meter long vessel was auctioned off by the Gibraltar Admiralty Court through a closed bidding system due to be submitted electronically by noon Tuesday, a spokesman for the court said. The court added that 63 applications were submitted for consideration, and the selection process is expected to take 10 to 14 days.

There has been a “surprise surge of potential buyers” for the vessel around the world, Nigel Hollyer, a broker to the Marshal of the Admiralty of the Gibraltar Supreme Court who ran the auction, told the Guardian last week.

The boat accommodates 12 people in six cabins and boasts a swimming pool, spa, 3D cinema and water sports equipment.

According to court documents seen by Reuters, JPMorgan (JPM) loaned 20.5 million euros to the British Virgin Islands-registered company Pyrene Investments Ltd, which was owned by Furdberg Holding Ltd. Furdberg was owned by Pumpyansky, who acted as a guarantor for the loan.

The documents say Pyrene Investments defaulted on the terms of the loan after Pumpyansky transferred his Furdberg shares to a third party on March 4 and was subsequently sanctioned, blocking loan repayments.

The 58-year-old man, worth an estimated $2 billion according to Forbes magazine, came under British and European Union sanctions shortly after the invasion of Ukraine.

Pumpyansky until March was the owner and chairman of the steel pipe manufacturer and supplier to the Russian energy company Gazprom. The company said he has since retired from the firm.

The Axiom is the first known luxury yacht to be auctioned off since the West imposed sanctions on powerful Russians following the February invasion of Ukraine.

Watershed

Sources close to the process told Reuters that JPMorgan would only claim the €20.5 million owed, with any further proceeds from the sale to be paid in court.

Dozens of yachts and homes linked to Russian oligarchs have been seized by world governments since the invasion. British and US authorities have said they will seek to send proceeds from the sale of assets to Ukraine.

A Gibraltar government source said the money would likely be frozen rather than given to anyone other than the oligarch.

A JPMorgan spokesman declined to comment.

James Jaffa, a lawyer for British yacht firm Jaffa & Co who represented Axioma before she was arrested, said the vessel was likely to sell for “well below” 20 million euros.

After the auction, the ship broker, crew wages, shipyard and maintenance will need to be paid to the bank after the auction, he said.

The successful sale, however, will set a benchmark for other banks seeking to recoup losses by auctioning seized property and other assets of sanctioned oligarchs.

“Axioma will be a game changer for assets against which there is bank financing because all other banks will realize that the asset can be sold and that they can get some or all of their money back,” he said.

However, he stressed that assets with no financial claims against them, which were seized by governments only because of sanctions, would be harder to sell.

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