VTB Capital PLC

The Joint Administrators of VTB Capital Plc, the British unit of state-owned Russian bank, have resolved to achieve a better result for the company’s creditors than would be likely if the company were wound up, but have advised that a going concern rescue is not out of the question if the sanctions against the company are withdrawn.

Although the company operated across the globe, its primary trading corridor was the Russian financial market. The company has been subject to sanctions restrictions relating to Russia’s annexation of Crimea since 2014. The severity of the sanctions was escalated through 2022 when additional sanctions against the company were issued by the UK, the US, the EU and several other jurisdictions. These sanctions included asset freezing measures by the UK and the US, which had the effect of prohibiting transfers of fund to or from the company, impacting the company’s ability to continue to operate in the ordinary course of business.

General wind down and basic needs licences were issued by OFSI on 25 February 2022 and 1 March 2022. On 31 March 2022, the company’s directors resolved to place the company into administration and filed an application with the High Court on 1 April 2022. On 6 April 2022, the Court stated that an administration order would not be granted until it was known whether the company would obtain a licence from OFAC, the US equivalent of OFSI. An OFAC licence was not granted until 11 November 2022. On 6 December, the High Court granted an administration order, and David Soden and Stephen Browne of Teneo were appointed Joint Administrators.

Since their appointment, the Joint Administrators have corresponded with OFSI and OFAC with the view of extending the current licences in place. They have also worked with company staff to develop a structured wind down plan pending receipt of any additional licences necessary to liquidate securities and financial assets which are currently encumbered or outside of the Joint Administrators’ control.

In addition to realising the company’s assets, the Joint Administrators are pursuing a c. $1bn claim commenced in the High Court by the company in 2019 and 2020 in relation to the two largest non-performing loans in the company’s portfolio. The Joint Administrators have taken legal advice and assessed the position in detail, and have determined that it is in the best interest of creditors to progress the case.

The Joint Administrators currently anticipate that there will be a distribution to unsecured creditors, although the quantum and timing of such a determination remains uncertain.

Their Proposals can be found HERE.