Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Court Refuses Bankruptcy for Uneximbank

The Moscow arbitration court on Monday refused a request from creditors to declare Uneximbank, the nation's leading private bank until the August 1998 financial crisis, bankrupt.

"Today's decision of the Moscow arbitration court constitutes judicial proof that Uneximbank is the first major Russian bank to have successfully negotiated a comprehensive restructuring plan with its creditors," said Todd Schafer, partner at Hogan & Hartson, a law firm that acts as legal adviser to Uneximbank.

The court's decision came just after the Central Bank's decision last week to extend Uneximbank's license for three months.

"Having completed analysis of the bank's financial statements and execution of all formalities, the Central Bank intends to restore Uneximbank's license," Central Bank Chairman Viktor Gerashchenko said Friday.

The Central Bank's representative sided with Uneximbank's managers at the court hearing Monday.

The Central Bank stripped Uneximbank, which owes creditors about $2 billion, of its license July 1 last year, but later reversed its decision and extended its validity until July 1, 2000.

In lengthening Uneximbank's license to Oct. 1, Gerashchenko referred to a letter from Charles Frank, acting president of the European Bank for Reconstruction and Development, that said the vast majority of the bank's creditors had approved a restructuring plan.

Shimoda Capital Advisers, which acts on behalf of a dissenting group of Uneximbank's Eurobond holders, says that as a result of recent developments at Uneximbank it has reviewed its plans to call a meeting of bondholders July 17.

However, Shimoda is continuing its litigation against ICFI - the International Company for Financing and Investments - a company formerly affiliated with MFK bank, which, like Uneximbank, is part of financier Vladimir Potanin's Interros group of companies. Shimoda has filed the suit in Cyprus.

"We are pleased that the bankruptcy case has been dismissed," said Andreas Rialas, senior investment officer with Shimoda. "It is more likely now that we will pursue legal action against the bank itself."

Uneximbank's lawyers are confident that the legal action will fail.

"The allegations made by the plaintiff in the ICFI litigation are without merit," Schafer said.

"ICFI has filed a motion seeking the dismissal of this frivolous lawsuit for want of prosecution."