When Russian billionaire Dmitry Rybolovlev met Seth Harrison 15 years ago, he was looking to invest some of his fortune in the life sciences sector, and the seasoned American venture capitalist seemed like the right partner.
They went on to set up a fund in which Harrison’s Apple Tree Partners would tap Rybolovlev’s family trust to invest in the formation of US startup pharmaceutical developers working on promising drugs for serious illnesses. Their venture ran smoothly for a decade before blowing up, according to a court filing by Apple Tree that describes how they met.
Now the two are locked in a bitter legal battle in which the Russian, who made his fortune in fertilizers, is trying to wind down a partnership valued at nearly $4 billion and accusing the venture firm of fund mismanagement and “exorbitant” travel expenses. The firm, in turn, says Rybolovlev’s family trust, Rigmora, is unlawfully turning off the funding spigot for several important companies in their portfolio.
Rybolovlev, owner of the AS Monaco football club, says he sank billions of dollars into the New York-based venture but doesn’t like some of the investments it has made. He is seeking to oust Apple Tree as the general partner. The fight is unfolding in courts in Delaware and the Cayman Islands.
Rigmora “has starved the fund of capital and unequivocally repudiated their contractual obligations,” Apple Tree said in a filing in Delaware Chancery Court, the premier US business court. That funding is vital to the development of compounds and therapies “that can potentially save lives and improve our health,” a lawyer for the firm said at a hearing last month.
Rybolovlev’s family trust said in court records it has fulfilled all of its obligations and has the right to review and approve budgets, including development milestones, before deciding to provide more capital. It has separately asked the court in the Cayman Islands, whose law it says governs the partnership, to liquidate the venture.
“These are speculative startup investments. Some will fail,” a Rigmora lawyer said at the Delaware hearing. “The interest of the fund is not served by pouring money into failing companies.” He said Apple Tree has caused an “irretrievable breakdown” in the partnership.
Apple Tree has urged the Delaware court to make Rigmora keep funding the companies, warning that they could go bankrupt and that more than 200 scientists and researchers could lose their jobs. Rybolovlev says those investments can’t be salvaged. Chancellor Kathaleen St. J. McCormick in Delaware agreed on the urgency and said the case should be expedited, setting a trial for September.
Rybolovlev, 58, has been involved in other high-profile legal fights. He was engaged in a protracted dispute with art dealer Yves Bouvier, whom he accused of overcharging for works of da Vinci, Magritte and others, and unsuccessfully sued Sotheby’s auction house as well. He and Bouvier, who denied the allegations, resolved their dispute in 2023.
Rybolovlev has a net worth of $9.5 billion, according to the Bloomberg Billionaires Index. He made most of his money from the sale of two Russian fertilizer companies in 2010 and 2011. A few years before that, he made a splash by paying Donald Trump $95 million for a Palm Beach property.
In the Apple Tree battle, the family trust said in court papers that there are billions of dollars at stake. It said in a statement that it has contributed more than $800 million to the partnership since 2022, of the nearly $2.7 billion it has invested.
Apple Tree puts Rigmora’s investment at $2.3 billion and says the partnership has so far made back close to what was invested. It says the partnership’s remaining value was marked at $3.9 billion at year end, leaving a potential total return of about 2.7 times the original investment. The trust had no comment on that figure.
The situation came to a head in May when the venture firm sued Rigmora, asking the Delaware court to make it keep funding more than half a billion dollars in outstanding commitments. Apple Tree wants the judge to declare Rybolovlev’s family trust in breach of its obligations. That would allow it to take measures against the trust, like levying a default charge of as much as half the trust’s interest in the fund. The lawsuit doesn’t name Rybolovlev as a defendant.
After Apple Tree filed the Delaware lawsuit and asked for additional funds, the family trust said it had asked the Grand Court of the Cayman Islands to order the fund to be liquidated and for a declaration that the trust wasn’t obligated to contribute more capital. Rigmora accused the firm of racking up travel costs of more than $1.3 million in 2024 and this year combined, and of improperly charging expenses to portfolio companies. It said Apple Tree has insisted on putting the fund’s capital in seven “hopeless investments.”
The portfolio’s remaining investments “are viable but require capital to achieve their potential,” the venture firm said in a statement.
Rigmora says Apple Tree is trying to “engineer a default” to confiscate billions of dollars in assets from Rybolovlev’s family trust. The venture firm denies that, and that it mismanaged or misused funds. It says charging expenses to portfolio companies is “normal and appropriate.” It says that if it did impose a default charge, it would only be to fund the portfolio and the partnership.
Despite Rigmora’s “recent behavior,” Apple Tree said in the statement, it “remains grateful for the amount of capital” the family trust has provided and is “rightly proud of the returns” it has earned for the trust.
This article was generated from an automated news agency feed without modifications to text.
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