The liquidators of two Irish-based Russian State-owned aircraft and shipping leasing firms have sought court orders to effectively wind up the companies.
The firms, which are part of the GTLK Europe group and are estimated to be worth $4.5 billion, have been subject to winding up orders from four creditors claiming they are owed $178 million, with the debt rising. However, due to sanctions, the liquidators must apply to the Central Bank for permission to carry out transactions involving the firms.
This case raises complex issues concerning the insolvency of corporate entities that are subject to sanctions, particularly as several directors of GTLK’s ultimate parent are government ministers or deputy ministers in the Kremlin. The matter highlights the challenges of navigating the intersection of international sanctions and corporate insolvency, and the potential implications for creditors and stakeholders of companies subject to such sanctions. This article will examine the key legal and financial issues at play in the case, and the potential outcomes for the creditors and the companies involved.
Creditors and Debt
The creditors of the Irish-based Russian State-owned aircraft and shipping leasing firms have successfully obtained winding up orders due to their claim of being owed $178 million by the GTLK Europe group.
This group is Russia’s largest leasing business in the transport sector, and its international leasing business is headquartered in Dublin.
The liquidations of the two firms have been described as the biggest in the history of the State, with their combined worth estimated at $4.5 billion.
The creditors claim they entered into a series of agreements to refinance the respondent firms’ debts, where they advanced significant funds to GTLK Europe Capital, of which GTLK was a co-guarantor.
However, after the sanctions were imposed, the creditors claim there has been significant default by GTLK Europe Capital regarding its repayment obligations, specifically the requirement to repay interest due on the loans.
This has led to the winding up orders and the request for various orders and declarations that formally recognize that the liquidators, and not any Russian entities, have effective control of the companies.
Central Bank and Sanctions
In light of the imposed sanctions, permission or derogation from the Central Bank is necessary for the joint liquidators to conduct transactions involving the concerned companies. This requirement has complicated the liquidation process, and the liquidators have asked the court for various orders and declarations that formally recognize their effective control over the companies.
The Central Bank of Ireland is the official body tasked with overseeing the sanction regime in this jurisdiction. Its lawyers have stated that they require time to reply to the liquidators’ application, which raises complex issues concerning the insolvency of sanctioned corporate entities.
The matter highlights the challenges faced by liquidators in managing the winding up of a company subject to sanctions and the need for regulatory bodies to ensure that the process is conducted in compliance with the law.
Legal Proceedings and Directors
One of the directors of the Russian State-owned aircraft and shipping leasing firms in question, Roman Lyadov, has reportedly left Ireland and returned to Russia, leaving the joint liquidators to manage the complex legal proceedings on behalf of the companies. This has added further complexity to the case, particularly given that several directors of GTLK’s ultimate parent are government ministers or deputy ministers in the Kremlin.
The joint liquidators have asked the High Court for various orders and declarations that formally recognize their effective control of the companies, particularly as the firms’ computer server had crashed shortly after the court made the orders appointing the liquidators, making it extremely difficult for them to access the firms’ books and records.
The judge has put a timetable in place for the exchange of legal documents and adjourned the matter for two weeks, with the hope that a date for the hearing of the liquidators’ application could be fixed on that date.
