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. Last Updated: 07/27/2016

Bankruptcy Case Against ORT Hits City Court

A Moscow court on Friday initiated bankruptcy proceedings against the country's top television channel over tens of millions of dollars in debts, but analysts said powerful political interests may block the process.

The Moscow Arbitration Court on Friday accepted a bankruptcy suit against ORT filed by the Moscow City Bankruptcy Committee. Political resistance to the action emerged immediately: The Federal Bankruptcy Service, or FSDN, moved to withdraw the suit, but so far has not succeeded.

By its own estimates, ORT owes about $75 million to program producers and other counterparties. According to Valery Saikin, head of the Moscow bankruptcy committee, the television station owes 44 million rubles ($2.2 million) in back taxes to the city of Moscow and another 23 million rubles to the federal budget. It is over these tax debts that the bankruptcy committee sued ORT.

"If [ORT] is against [bankruptcy], let them get out of it themselves," Saikin said in a telephone interview.

Last month, several ORT creditors succeeded in impounding some of the company's property, forcing the channel to reduce its newscasts to brief bulletins showing no footage. But ORT worked in that mode just for one day. Valentina Matviyenko, deputy prime minister for social affairs, promptly asked the Finance Ministry to restructure ORT's debts and ordered FSDN to find ways for the channel to avoid bankruptcy.

First deputy FSDN chief Artyom Bikov said in an interview Friday that ORT's bankruptcy ran counter to the interests of the state because the television channel was a "unique company of federal importance."

"It is not a milk factory," he said.

Industry experts said it was difficult to tell which of the forces in the tangle of interests surrounding ORT could be pushing for bankruptcy and which were trying to prevent it.

One reason the state does not want to bankrupt ORT may be that government agencies which took part in setting up ORT, like the State Property Committee, do not want cases of mismanagement at the station to come to light, said Andrei Tsitovsky, an analyst with the TACIS-financed media journal Sreda.

Another group likely opposed to ORT's bankruptcy comprises program producers and the Ostankino transmission center, which is owed over 100 million rubles. It is unclear how much of their money they can get back if ORT is declared bankrupt.

One of the most powerful figures in the ORT saga is tycoon and CIS executive secretary Boris Berezovsky, who is believed to control the channel despite the fact that the government holds a 51 percent stake in it.

"Berezovsky is a very important player," said Yelena Koneva, director general of the media market research agency COMCON. "He has the power to influence the process. Obviously, Berezovsky is not interested in losing his control of the channel."

Berezovsky has recently lost some of his political influence, and the attack on ORT may be aimed against him, some analysts have speculated. Tsitovsky said, however, that the ORT dispute was about economics, not politics. He said the Moscow government, which controls the city bankruptcy committee, initiated the proceedings to help the city solve its financial problems.

"The Moscow budget is under strain, and to reduce the deficit, the city has to look for money in different places," he said. Although under Russian bankruptcy law a suit cannot be recalled once accepted by a court, proceedings can be halted. Given the political importance of the case, technicalities might not matter, said Vladislav Krylov, an independent legal expert.