Billionaire Michael Cherney took a hit to both his wallet and his reputation on Friday, when a state court judge in Manhattan ruled that the businessman owes a half-billion dollars to longtime foe Alexander Gliklad. Siding with lawyers at Winston & Strawn, the judge ruled that Cherney conjured a flimsy defense and dragged his feet during discovery.
In a short but punchy decision, New York Supreme Court justice Melvin Schweitzer agreed with Gliklad that a promissory note entitles him to a $270 million payment from Cherney—an amount that’s now swelled to about $503 million with interest. Cherney claimed that there were errors in the execution of the promissory note, which was signed in Russian in a hotel room in Vienna following a boozy evening a decade ago, and that the note was supposed to state that Cherney’s the one entitled to payment.
Gliklad is represented by Winston partner W. Gordon Dobie. Philippe Adler of Friedman Kaplan Seidler & Adelman represents Cherney along with attorneys at Frankfurt Kurnit Klein & Selz.
Cherney is an Uzbekistan-born industrialist who emigrated to Israel in the 1990s. Gliklad, an Israeli, is the former chairman of KuzbassRazrezUgol (Kuzbass coal), one of the largest coal mines in Russia. He resides in New York City.
Gliklad brought suit in 2009, demanding payment on the promissory note. According to Gliklad, the note and the Vienna celebration memorialized an agreement in which Cherney paid $270 million for a stake in Kuzbass coal.
Under Cherney’s versions of the events, the roles of creditor and debtor are reversed. He claims he lent Gliklad $270 million to finance the purchase of Kuzbass shares. Cherney’s lawyers asserted in their latest brief that Cherney “unwittingly countersigned above the printed word ‘debtor.’”
Over the case’s four-year history, Schweitzer kept striking Cherney’s defenses to punish him for what the judge called “obstructionist behavior.” Schweitzer concluded in an August 2013 decision that Cherney’s version of the events was a “sea of inconsistencies.” The judge finally entered judgment in Friday’s decision, writing that Gliklad had proved his case.
Correction: An earlier version of this story incorrectly reported in the last paragraph that the judge faulted Gliklad for inconsistencies. As corrected above, the ruling was instead directed at Cherney. We regret the error.