How the Manager for Morshynska and Myrhorodska Was Selected: What We Saw on Prozorro

In recent weeks, ARMA has increasingly been announcing that it is preparing complex assets for the selection of a manager. However, more than a year after the new ARMA law was adopted, there are still few real cases where a manager was actually found for such seized property under the new rules. The most prominent of them is the very first: the competition to select a manager for Morshynska and Myrhorodska, which had been awaited for several years.

The block of shares in PrJSC Myrhorod Mineral Water Plant and PrJSC Morshyn Mineral Water Plant Oskar, together with the related corporate rights, is one of the most valuable assets under ARMA’s management. Its market value is estimated at over UAH 5 billion. Net revenue from product sales in 2025 was about UAH 10 billion, and the projected monthly income from management starts at UAH 84 million. 

Unlike ordinary real estate or cash, assets such as share blocks and single property complexes are classified as complex under the ARMA Law. Their manager is therefore determined through a selection procedure on Prozorro under Article 21-4 of the ARMA Law and the relevant CMU Resolution No. 167.

On July 10, a third attempt to find a manager for Morshynska was announced. The court seized this asset back in 2022. In 2023, Carpathian Mineral Waters LLC, itself a water producer, became its manager, but in April 2025 ARMA terminated the agreement with it. A selection procedure announced in November of that year was canceled. The current procedure is therefore the first for this asset under the rules introduced by the ARMA reform: a separate procedure for complex assets, a Commission of mixed composition, and an auction on Prozorro. 

That is exactly why it is telling: it tests how the new rules work.

How the manager selections were announced

The first selection was announced in May. The bid submission period lasted more than a month, but only one company submitted a bid: HOTEY RESPECT LLC. 

The law does not allow the asset to be handed over to a single applicant without competition. If fewer than two participants are admitted to the auction, the selection does not take place, and ARMA must hold a “repeat second stage” within 10 working days, which in effect means announcing the selection anew. This is exactly what happened in July.

Terms of the new selection: what was required of participants

The new selection announcement generally complied with the Law and Resolution No. 167. It contained: 

• information about the asset; 
• an indicative management plan; 
• qualification requirements and a list of documents confirming compliance with them; 
• a model agreement; 
• remuneration terms; 
• the selection procedure, including requirements for submitting documents and for the auction. 

However, in future selections, the procedure for reimbursing the manager’s expenses and for paying its remuneration should be set out separately and exhaustively. Whether it makes economic sense for a participant to submit a bid depends on this.

In general, the ARMA Law sets a number of mandatory qualification requirements that are the same for all selections and all participants, and it allows ARMA’s commission for determining the manager to set additional ones. The basic qualification requirement under the ARMA Law is at least three years of experience in leasing out movable and immovable property or in acting as a leasing intermediary. This requirement is a formality and is insufficient to assess whether a participant can manage a large business. Any business entity that has officially leased out real estate and movable property as part of its business activities for three years will meet it. 

The other requirements under the Law are safeguards. 

• A participant may not: be linked to the asset owner, the persons involved in the criminal proceedings, or the aggressor state;
• be under sanctions; 
• have tax arrears exceeding 100 minimum wages; 
• be bankrupt, etc. 

The participant’s officers must not have been held liable for corruption or bid rigging or convicted of money laundering or crimes committed for gain. 

The law also specifically bars from participation those who produce or sell interchangeable goods, use similar raw materials or fixed assets, or depend in their pricing on the enterprise whose assets are being transferred to management. Recall that the manager of Morshynska selected in 2023 was itself a water producer. Under the current rules, such a participant would not have been admitted to the selection.

The list of documents participants had to submit was feasible and non-discriminatory. However, it should be refined for future selections. For example, participants were required to submit a “certificate of no criminal record” and a “certificate of no corruption offenses,” although state bodies issue different documents: extracts from the relevant registers. A document with such a title can only be drawn up by the participant itself, which does not guarantee its reliability. Nor did the announcement specify how recent the certificates had to be.

To offset the general nature of the basic qualification requirements, the Commission set an additional one: management experience in FMCG, the food industry, distribution, corporate rights, or large enterprises. However, such experience could be confirmed by almost any document, including a free-form certificate. This rules out discrimination but makes the requirement largely a formality.

The key information participants had to state in their bids was the desired management remuneration as a percentage of profit. It could be up to 100% of profit, with a minimum auction step of 10%. The winner was also required to provide a bank guarantee of over UAH 100 million and to pay a fee of UAH 5 million to the e-procurement platform.

Questions from potential participants

All inquiries and ARMA’s answers have been published on Prozorro. Businesses were primarily interested in how the asset would be managed going forward. 

First, the law does not provide for reimbursement of the manager’s expenses if the seizure is lifted or the asset is confiscated early. Second, some of the enterprises are located in occupied territory; the ARMA replied that it cannot exclude parts of the asset from the selection. Third, the plan projects the same revenue for 2026 as for a full year, even though the manager will be working for only about two months. The ARMA gave assurances that failing to meet the target in 2026 would not be treated as a breach, although this is not apparent from the model agreement.

At the same time, the clarifications the ARMA gave potential participants were not always consistent. This concerns the question of whether the manager must make the guarantee payment from its own funds even before receiving dividends. 

On July 30 and August 7, the Agency twice replied that the model agreement provides for a “mandatory monthly payment from the manager’s own funds regardless of whether income is received.” On August 18, however, it stated: “The Manager is not required to make the guarantee payment from its own funds in the interim months (including the entire period until June 1, 2027, based on the results of 2026),” because “payment is made for the reporting period, that is, a year, from the dividends received, not from the Manager’s own funds in advance.” These answers probably concern the interpretation of different terms and versions of the agreement, but it would be better if the Agency’s answers were consistent.

Participants were assessed not by ARMA itself but by the Commission for the Selection of Managers of Complex Assets, which has eight members: four appointed by the Agency and one each by the Business Ombudsman, the NSSMC, the Ministry of Economy, and the Ministry of Justice. Decisions were made by a majority of those present, but at least two of the votes in favor had to come from members appointed by external bodies.

Auction: from 80% to 0.01%

Five participants submitted bids in the competition to manage Morshynska, and all were admitted to the auction: Alliance D LLC, Asset Management Company Ready-Invest LLC, Legal Bureau Prioritas LLC, Meat Processing Plant Yuvileinyi LLC, and Asset Management Company Ukrcapital LLC. 

It is important to understand that this means the Commission had no objections to their qualifications. Before deciding on admission, the Commission checked their documents confirming compliance with the qualification requirements (management experience and leasing out property) and the absence of grounds for refusing participation. Initial bids ranged from 30% to 80% of profit; after the auction, they ranged from 0.01% to 10%.

Under the ARMA Law, a bid is considered abnormally low if it is 40% or more below the average bid of the other participants at the start of the auction, or 30% or more below the bid of the next participant in the final ranking. Given how far the bids fell in the Morshynska manager selection, the bids of all participants meet these criteria. Under the ARMA Law, a winner with an abnormally low bid had two working days to justify its price with calculations showing how it would cut costs, what favorable conditions it had, or how it would increase income compared to the indicative management plan. If no justification is provided, the Commission must reject the bid; if the justification is inadequate, the Commission may reject it.

The auction was won by Asset Management Company Ukrcapital LLC with remuneration of 0.01% of the profit from managing the asset, or roughly UAH 110,000 per year. The company submitted a justification for its abnormally low bid. It cited the absence of any need for separate infrastructure and the fact that it already has a license and staff, and it set out scenarios for a 10–15% increase in profit. The Commission found the justification inadequate. The mandatory contract-related expenses alone (the e-procurement platform fee, the bank guarantee, and insurance) amount to about UAH 10 million, dozens of times more than the manager’s remuneration. Moreover, some of the arguments concerned the winner’s qualifications rather than favorable conditions justifying such low remuneration. Nor were there any calculations of the effect of the tools for increasing income or of the methods for applying them. The Commission assessed the justification on the merits rather than formally and rejected the bid.

The winning bid

Next came the bid from Legal Bureau Prioritas LLC, offering remuneration of 0.9% of profit, or roughly UAH 10 million per year. This bid was also abnormally low, and the company likewise submitted a justification. The arithmetic is the same: the remuneration declared by the participant roughly equals the mandatory expenses it will have to incur. The key question therefore became whether the income from managing the asset would be enough to cover these expenses. 

In its justification, Legal Bureau Prioritas LLC pointed to several factors. Its existing staff would be sufficient. The bank guarantee costs would be one-off, and the bank had reduced them. Insurance was impossible because no suitable insurance product exists on the market. The winner also mentioned a new market niche for substitute products that had opened up after Coca-Cola’s production capacity was restricted, as well as its ties with a sports equipment manufacturer and plans to develop a line of sports drinks. In Prioritas’s view, its total remuneration (≈UAH 29.7 million) significantly exceeds the one-off costs and the optimized annual staff costs. The winner also presented a timetable within which it considers it possible to study the asset and draw up a plan for increasing income. 

The Commission was persuaded by the arguments of Legal Bureau Prioritas LLC regarding its abnormally low bid, and the company was declared the winner. According to the Commission, the same approach was applied to both participants when considering their justifications of an abnormally low price; in particular, their representatives were invited to Commission meetings to give explanations. Prioritas’s justification was found adequate in view of its methods for cutting costs, favorable conditions (the bank’s offer regarding the bank guarantee), and plans for increasing income (analysis of sales markets, export development, logistics optimization, and elimination of duplicate costs). 

Questions about the winner

After the auction results were announced, concerns were raised publicly about the documents Prioritas used to confirm its experience. Our analysis shows that this evidence of three years of business experience in leasing out property does indeed raise questions. 

Specifically, the documents show that the participant, Legal Bureau Prioritas LLC, leased property to Prioritas Law Association, which is headed by the same person as the LLC. This is not formally prohibited, but it gives food for thought. 

In future selections, it would be advisable to require as proof of experience not only contracts but also payment instructions and other documents that reliably establish that payments under the contracts were actually made. This is all the more relevant because ARMA already applied such requirements in last year’s selections to protect itself against unreliable information from participants.

In addition, the questionnaire submitted by Prioritas lacks some of the information about the participant’s authorized person. Furthermore, the information certificate from the Register of Corrupt Officials concerned the participant itself (the legal entity) rather than its official (officer). Under Resolution No. 167, ARMA therefore should have posted a request on Prozorro to remedy the discrepancies in this participant’s bid instead of admitting it to the auction.

The way the participant confirmed the additional requirement (management experience in FMCG, the food industry, corporate rights, or large enterprises) raises no fewer questions. Legal Bureau Prioritas LLC submitted two documents. The first was its own certificate stating that it has been the sole member of Terra Incognita Group LLC since 2015 and “has gained successful practical experience in managing business processes.” The second was a letter of recommendation from Terra Incognita Group itself. In other words, the recommendation for its sole owner came from a related company, and the letter was signed by a director whom this owner appoints. Moreover, neither document contains any figures or specific results, only general phrases about a “high level of professional competence” and “stability of management decisions.” 

YouControl’s open financial data may cast doubt on this picture of success. Terra Incognita Group’s revenue fell from UAH 17.7 million in 2023 to UAH 5 million in 2025, and its net profit from UAH 1.8 million to UAH 0.6 million. The revenue of the group the participant is to manage is about UAH 10 billion, roughly two thousand times more. Terra Incognita Group itself produces camping and outdoor gear. Its experience could be counted only because of the broad wording about “management of corporate rights.” As a result, the additional requirement, which was meant to offset the general nature of the basic one, was in practice satisfied with documents drawn up by the participant itself and a company it controls.

That said, within this particular selection, such issues should have been resolved at the stages of preparing the announcement and qualification, both of which are already over. If a participant has submitted false information that is material to determining the manager, Resolution No. 167 does not allow it to be corrected; such a participant must be found non-compliant. The Commission’s decision can be challenged in an administrative court, but this usually does not halt the selection. In this case, the Commission evidently had no evidence that the information submitted was false.

Moreover, according to information we received from the Commission itself, it should be borne in mind that the Commission is not entitled to rank participants by additional criteria by comparing their experience. It may only assess whether each participant meets the specific qualification requirements. Nor may the Commission set additional requirements after the bid submission deadline, since compliance with the qualification requirements must be assessed on an equal basis. 

In particular, since the selection announcement contained no requirements from the beginning regarding authorized capital, the financial results of enterprises managed by the participant, or the links between the participant and the enterprises it managed, none of these requirements can be introduced at the qualification stage, let alone after the auction.

In addition, the Commission considers it necessary for ARMA, before concluding the management agreement, to further verify the authenticity of the documents submitted to confirm experience and, if there are signs of a criminal offense, to refer the matter to law enforcement.

What comes next

After the winner was determined, the ARMA had five working days to conclude the agreement. However, on September 29, a day before this deadline expired, the Dnipropetrovsk District Administrative Court, acting on an application by Meat Processing Plant Yuvileinyi LLC, another auction participant, prohibited ARMA from concluding an agreement with Prioritas and signing acceptance and transfer certificates until the judgment in the case enters into force. This is probably why the agreement with the manager has still not been published on the selection page on Prozorro.

The plaintiff is challenging the admission of its competitors, the Commission’s decisions, and even the announcement itself. The court held that concluding the agreement is no longer part of the competition, so Article 151(6) of the Code of Administrative Procedure, which prohibits interference in public competitive procedures, does not apply here. 

This interpretation is debatable, since the Law regulates the conclusion of the agreement as part of the same procedure and even provides for replacing the winner. Moreover, the plaintiff, Meat Processing Plant Yuvileinyi, came last, in fifth place, in the auction. Even if Prioritas should not have been admitted, the next contender is Alliance D with 1%. The ruling does not explain how the ban protects the rights of this particular plaintiff, nor does it weigh the public interest in effective management of the seized asset. While the case is pending, the group effectively has no manager, and the selection, which has dragged on since May, is frozen once again. 

Even after the court dispute is resolved, the asset will not pass to the manager immediately. According to the ARMA, after the agreement is signed, the parties must jointly apply to the AMCU, and only then can the acceptance and transfer certificate be signed. The previous review concerning the IDS group took up to a year and a half. It is therefore currently impossible to predict when the asset will actually be transferred.

At the same time, the procedure has generally begun to work: competition has emerged, and the Commission examines justifications of abnormally low bids on the merits. Still, even based on this selection, which has yet to end successfully, we can offer the ARMA the following recommendations.

1. Correct document titles. Replace the “certificate of no criminal record” and the “certificate of no corruption offenses” with documents that state bodies actually issue (extracts from the relevant registers). Likewise, for anticompetitive concerted actions, require information from the relevant state register instead of a certificate. This will make it impossible to substitute self-drafted certificates for official documents. The announcement should explicitly allow non-resident participants to submit documents provided for by the legislation of their countries, with an appropriate translation.
2. Validity requirement for documents. Specify how recent documents must be, for example, issued no earlier than 30 days before the selection is announced.
3. Multi-level confirmation of additional experience requirements. Keep the option of alternative supporting documents, but require a free-form certificate together with other documents of the participant’s choice (projects, letters of recommendation, documents on participation in management, etc.). A certificate of a few sentences should not replace all evidence of experience.
4. Payment documents to confirm leasing experience. In addition to contracts, require payment instructions and bank notifications, as in ARMA’s previous selections. This will make it possible to establish that the business transactions actually took place.
5. Separate presentation of expenses and remuneration. Structure the announcement so that the procedures for reimbursing the manager’s expenses and paying its remuneration are each described separately and exhaustively, as the requirements for the content of the announcement demand.

It is worth noting that ARMA chose an extremely well-known and complex asset in advance to test the new rules for selecting managers in practice. As of October 21, 2026, Prozorro lists 19 competitive selections, of which only one has resulted in an agreement, eight did not take place, and eight are still accepting bids. 

It therefore depends on ARMA and the Commission how detailed and tailored the requirements will be for each complex asset, and how well the manager selections will be conducted. Clearly, the performance of these tasks still needs to improve.