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. Last Updated: 07/27/2016

ARKO to Start Paying SBS-Agro Debt Again

Creditors of ailing SBS-Agro bank have approved an agreement that will let the Agency for Restructuring Credit Organizations, or ARKO, resume paying SBS-Agro's debts.

The creditors representing at least 62 percent of 49.1 billion rubles ($1.7 billion) of SBS-Agro's debt — private depositors and commercial bodies such as banks, firms and state financial institutions — have voted in support of the agreement.

Support from creditors holding a majority of the bank's debts is necessary for the settlement to proceed. ARKO has already paid creditors who were owed less than 20,000 rubles ($700).

As soon as the final results of a vote taken at a creditors meeting held in Moscow on Friday are known, ARKO will submit the creditors decision to the Moscow arbitration court for final approval, ARKO chairman Alexander Turbanov said Tuesday at a news conference.

By law, the court can take up to a month before setting a hearing date, which is then scheduled in accordance to dates available.

If the court rules against the settlement or if it fails to make a decision before the moratorium on claiming SBS-Agro assets in legal suits expires May 17, the agreement will not be implemented.

"In either case we will switch directly to bankrupting SBS-Agro before the deadline expires," said ARKO spokesman Alexander Voznesensky.

However, ARKO plans to start paying off retail customers as soon as March 1, regardless of when the court is to make its decision.

Private depositors will receive 10 percent of what they can get back in a lump-sum cash payment.

"We feel that is the right course of action given that people have already been waiting for too long to get their money back," Turbanov said.

Under the agreement, private depositors, who represent 5.2 billion rubles of SBS-Agro's total debt, will receive 10 percent of their money in a lump-sum cash payment of no more than 20,000 rubles.

The rest would be covered by Finance Ministry bonds with maturity dates in 2007 and 2008. The remaining funds, for individual creditors owed less than $1,000, will be paid in ARKO bonds to be cashed within 10 months.

"We will commit ourselves to paying out as much as possible, including trying to bring back the assets that were stripped from the bank since 1998," Turbanov said.

Ivan, 49, who would not give his last name but said he lost $20,000 in SBS-Agro, said in a telephone interview that he had voted against the settlement at Friday's meeting.

"All I see being paid to me is 20,000 rubles. And I simply have no trust that the MinFin bonds will ever be paid," he said. "Where is the guarantee that the state would not default on those, or that they will keep postponing the maturity as they did in Soviet times?"

Ivan said he will wait for the court decision on the agreement and then think of the next steps on fighting for his money.

"I am quite ready to consider a private legal action," he said, adding, however, that he has little faith in any option he can take.

"I just feel that we [creditors] are being fooled by the state again."