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. Last Updated: 07/27/2016

Mil Bankruptcy Finally Ends

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A Moscow court Friday officially ended bankruptcy proceedings against the Mil Helicopter Plant, closing the book on years of legal maneuvering and clearing the way for the world-famous aviation company to get back to business.

"The Moscow Mil Helicopter Plant is now returning to its normal activity as a joint-stock company," Interfax quoted the plant's current external manager, Leonid Zapolsky, as saying Friday.

Zapolsky is the sixth court-appointed manager at the company since June 1999, when the plant went bankrupt with debts estimated at about $11 million. Zapolsky himself was appointed by the court a record four separate times.

He plans a new share issue for Mil that would increase the government's stake in the plant to just over 50 percent and give a blocking stake to Mezhregionalny Investitsionny Bank in exchange for debts.

MIB, Mil's main creditor, bought 40 percent of the company's outstanding debt last summer with the intention of converting it into a blocking stake of 25 percent plus one share and has since enjoyed friendly relations with Zapolsky, whose plan was supported by the Property Ministry, the Federal Bankruptcy Agency and the Russian Aviation and Space Agency, Rosaviakosmos.

"The next step is the meeting of shareholders, which will be organized soon," said MIB's deputy chairman of the board, Sergei Surov.

Mil's biggest shareholder is the government, with 31 percent, followed by MIB with 19 percent, Rosvertol, the Rostov-on-Don helicopter plant, with 12.7 percent and U.S. helicopter giant Sikorsky Aircraft Group, a subsidiary of United Technologies, with 9.38 percent.

"At last, all the i's are dotted and the t's are crossed in this mess," Surov said.

But perhaps not surprisingly, not everyone involved is happy.

"I don't know what is going to happen," said Nadezhda Mil, daughter of the pioneering engineer Mikhail Mil and a minority shareholder, in a telephone interview Friday.

"All that remains of the plant now is a shell," Mil said.

Mil is not alone: The plant's employees last week sent an urgent appeal to Georgy Poltavchenko, the presidential envoy to the Central Federal District, saying that "no outside forces, including Sikorsky, which has proved itself to be enemy No. 1, can destroy the world's leading … constructor of heavy helicopters as our officials are doing through external managers.

"The best employees are systematically being fired because they were fighting nonprofessional management," the appeal said.

At the end of last year, Zapolsky fired 40-year veteran Leonid Babushkin, who designed the notorious Mi-8 and Mi-14 models. And Mil's chief engineer, Andrei Alpatov — a household name among helicopter companies all over the world — was also fired by Zapolsky after 30 years in the company's design bureau, along with many others.

Yevgeny Chelobitko, project manager for United Technologies Group in Moscow, on Friday blasted the external management team for the firings.

"After seizing power at the plant, they [the Zapolsky team] went beyond their duties," Chelobitko said. But, he added, the real fault lies with Russian bankruptcy laws.

When asked who will run the plant now that the external management term is officially ending, Surov from MIB said that Zapolsky is definitely not a possibility.

"Zapolsky has played his role, there will be a totally different person as a head now," he said.

The new head of the plant will be selected at the next general shareholders meeting.