Sova Capital Limited

The Joint Special Administrators of a London broker subject to Russian sanctions are seeking Court approval of an innovative transaction to sell a portfolio of the company’s otherwise illiquid securities.

Sova Capital Limited is an FCA-authorised and regulated wholesale broker headquartered in London which provides a full range of investment brokerage services to institutional and corporate clients.

The company’s primary trading corridor is providing international investors access to the Russian market. As a result of the war in Ukraine and Russian sanctions, the company experienced a severe liquidity crisis, resulting in the appointment of David Soden and Ian Wormleighton of Teneo as Joint Special Administrators on 3 March 2022.

In their Progress Report dated October 19, 2022, the Joint Special Administrators advised that they were prioritising a sale of the company’s business and certain assets in order to maximise returns to creditors.

At that point, conversations were continuing between the company’s management and its majority shareholder, Roman Avdeev, regarding a potential rescue of the company. However, restrictions imposed by the Russian Government and western sanctions were making this increasingly difficult.

Now, the Joint Special Administrators are seeking Court approval to sell a portfolio of the company’s Russian securities to Avdeev (who is not himself subject to sanctions), who has offered to purchase the securities via a credit bid of a £233 million claim he has against the company.

The Joint Special Administrators had previously attempted to market these securities to the likes of Goldman Sachs, JP Morgan, Citigroup and others, but did not receive adequate interest.

The securities cannot be sold on the Russian exchange because of Russian rules preventing institutions from nations that have imposed sanctions on Russia from trading on the company’s stock market.

The Court does not appear to have released a decision on the matter at this time.

The Joint Special Administrators have been assisted by legal advisors Hogan Lovells, Winston & Strawn and Shoosmiths and financial advisors Alantra Partners. Their latest Progress Report can be found HERE.