Vélfag’s Struggles Intensify as Layoffs Hit the Company
Alfred Tulinius, the chairman of the board at Vélfag, has confirmed that the company made the difficult decision to dismiss between seventeen and eighteen employees this morning. This follows a series of layoffs that have reduced the workforce from 35, a number that has dwindled since Arion Bank froze the company’s accounts earlier this summer due to the majority owner’s connections to a Russian firm on the EU’s sanctions list.
“The company is effectively inoperable and unable to conduct any business,” Tulinius shared in an interview with Vísi. “Our goal now is to keep it on life support.”
The immediate challenge lies in negotiating with creditors, suppliers, and banks. Although Vélfag has not filed for bankruptcy, its operations remain halted due to the freezing of assets. “We’re stuck; we can’t move backwards or forwards,” he lamented.
In an announcement on the company’s Facebook page, management expressed their commitment to preserving Vélfag during this turbulent time, vowing to meet obligations to employees, suppliers, and service providers whenever possible.
Court Decisions and Future Prospects
A recent ruling from Reykjavík District Court dismissed Vélfag’s request for a review of the asset freeze, a decision currently under appeal to the National Court. Additionally, there is a request for the Supreme Court to directly consider the case.
Tulinius indicated that the next steps may involve pursuing legal action against Arion Bank to lift the freeze. “The court has affirmed that it is the bank’s responsibility to address this issue, not the Ministry of Foreign Affairs,” he explained. “But regardless of the court’s decision, the life has been drained from the company.”
He emphasized the protracted nature of the process, noting that suing the bank, which operates outside administrative law, could extend the struggle indefinitely. “This feels like a final death sentence for the company,” he added.
Interest in Vélfag’s Assets
Despite the bleak outlook, Tulinius suggested that there could be interest in Vélfag’s assets, which he maintains are sufficient to cover its debts. “I wouldn’t be surprised if someone were to step in and engage with our customer base,” he noted. “If that happens, I would celebrate it, as it would ensure customers aren’t left out in the cold.”
However, uncertainties loom over Vélfag’s ability to sell its assets due to the existing sanctions. Any potential sale would require authorization from the Ministry of Foreign Affairs, and the assets are also entangled with a general mortgage held by Arion Bank. “It’s as if one entity is tying my feet while the other has my hands behind my back,” Tulinius remarked.
With no clear path forward, he admitted that he could not propose ideas for Vélfag’s potential revival.
The Background of Sanctions
Vélfag finds itself enmeshed in sanctions due to Ivan Kaufmann, its majority owner, and his links to the Russian shipping company Norebo JSC, which was placed on the EU sanctions list due to its ties to destabilizing efforts in Europe last May.
Norebo JSC previously held a controlling stake in Vélfag through its subsidiary, Norebo Overseas Holding, but in 2023, ownership was transferred to Titania Trading Limited, a company linked to Nikita Orlov, the son of Norebo’s owner, Vitaly Orlov.
A Controversial Takeover
Just four days before Norebo was added to the sanctions list, Kaufmann acquired Titania, securing over 81 percent of Vélfag’s shares. Following this, Arion Bank froze Vélfag’s funds, citing Kaufmann’s ownership as a concern.
Questions have arisen regarding the appropriateness of Kaufmann’s dealings, particularly a leveraged takeover that appeared to benefit him while failing to disclose significant financial obligations. Kaufmann has acknowledged assuming nearly ten million euros in debt when he acquired Titania, insight that complicates the financial picture further.
The State Department’s recent correspondence indicates that Kaufmann did not fully disclose the nature of this takeover when he submitted relevant documents to Arion Bank. It wasn’t until six weeks post asset freeze that he provided further details, suggesting a lack of transparency in the acquisition process.
The situation continues to evolve, and we will provide updates as more information becomes available.
