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Future of Russian-owned Phillips auction house may be in ‘significant doubt’

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A Russian-owned British auction house that has been the target of calls for a boycott has lost tens of millions of pounds in recent years and has been left in a parlous financial position, records show.Phillips is heavily reliant on guarantees provided by two founders of a Russian luxury retail groupand has seen its debts mount up.Auditors said the ability of the Russians to provide support could not be guaranteed and a “material uncertainty” may cast “significant doubt” on the business’s ability to continue.The accounts for the year to the end of December 2021 were lodged with Companies House in March, leaving the firm subject to a penalty as a result of being late.They reveal that its ultimate parent company was switched to one registered in the secretive tax haven of the British Virgin Islands nine days before Russian tanks rolled into Ukraine.Phillips, which is one of Britain’s major auction houses and has offices in cities around the world, is owned by Leonid Friedland and Leonid Strunin, the founders of Mercury Group, the largest luxury retailer in Russia.

The men, who are resident in Monaco and Cyprus respectively, are not subject to western sanctions.Some £95.9m is owed to their companies in the next 12 months, with another £57.8m owed to the Russians in the longer term.

This is offset to some extent by Phillips having £7m in the bank and being owed £59.8m by the Russians’ companies.However, auditors express doubts over the ongoing status of the company due to its excess of liabilities over assets to the tune of more than £90m, as well as the two Russians’ ability to continue to finance the losses.

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