A High Court judge has expressed his scepticism about two Irish-based Russian State-owned aircraft and shipping leasing firms bids to enter examinership.
The court was told the application was being made following a recent decree, purportedly issued by Russian Federation president Valdimir Putin, that the Russian state would cover US$1.3BN of the two firms’ debts.
Mr Justice Brian O’Moore expressed his view about a proposal to place GTLK Europe DAC, and the related entity GTLK Europe Captial DAC into examinership during Friday’s vacation sitting of the High Court.
The judge said that the application to appoint an examiner when the court was due to commence the hearing of an application, next Monday morning, to have the firms wound up.
Four the firms’ creditors have asked the High Court to appoint a liquidator to the related firms, which areworth over US$4.5/€4.11 Billionon the grounds the firms are insolvent and unable to pay their debts.
The four, whose petition is being supported by other creditors of the group, want Damien Murran and Julian Moroney of Teneo Restructuring Ireland appointed as joint liquidators to the companies which have been hard hit by international sanctions imposed on Russia following the invasion of Ukraine.
The companies are opposing the application and have claimed in those proceedings that despite the sanctions, they are solvent.
If that application, which is due to commence before Mr Justice Conor Dignam on Monday, is successful and a liquidator appointed to the firms, it would be the largest winding up in the history of the Irish State.
However, on Friday the companies brought a petition before Mr Justice O’Moore seeking the appointment of insolvency practioner Mr Joe Walsh as examiner to the companies.
The companies claim in the examinership proceedings that they have become insolvent as a result of the sanctions.
The court heard that an Independent Expert had stated in a report that if an examiner is appointed, and a scheme of arrangement with the firm’s creditors can be agreed, the two companies have a reasonable prospect of surviving into the future as going concerns.
GTLK’s creditors would do better under a successful examinership, compared to a liquidation, it was also submitted.
One of the grounds for seeking the protection of the courts was a decree made by President Putin regarding GTLK’s debt.
The court heard that the Russian state would cover US$1.3Bn of GTLK’s debt through a bond issue.
The companies did not seek to have Mr Walsh appointed on an interim basis, but did seek directions from the court regarding the hearing of the examinership petition.
In response Mr Justice O’Moore said that he was not making any orders in respect of the examinership application other than adjourn it to Monday morning.
He welcomed the fact that at the last minute the companies had “at the last minute” decided not to seek to have an examiner appointed on an interim basis, as it was not something he would have been prepared to do.
The judge said that he was sceptical and had difficulties about a number of matters in the proposed examinership, given that the application had been made shortly before the applications to wind up the companies was about to be heard.
The judge he was further sceptical about the Russian President’s decree which he said purports to write off a huge amount of debt owed by the companies.
His concerns were borne out the fact that a huge debt owed by the GTLK group, which is owned by the Russian Federation’s Ministry of Transport, was being covered by an administration run by President Putin.
He also expressed his concern about the contents of a sworn statement from the firms’ director Mr Roman Lyadov. The judge said that in a sworn statement opposing the winding up petition Mr Lyadov had said the firms were not insolvent, but in a short affidavit that forms part of the examinership application Mr Lyadov says the firms are insolvent.
When adjourning the case the judge also directed that the legal documents in the case be furnished to lawyers acting for the parties seeking to have the firms wound up.
Previously the High Court heard that GTLK, is Russia’s largest leasing business in the transport sector, and leases ships and aircraft to customers all over the world.
Several directors of GTLK’s ultimate parent are government Ministers or deputy Ministers in the Kremlin.
The four creditors that have petitioned the court for orders winding up the GTLK firms are Dublin registered Trinity investments DAC and an associated entity Allestor Europe Multi Asset Portfolio which is a sub fund of Allestor Capital ICAV.
The other two creditors seeking the winding up orders are Ben Oldman Special Situations Fund LP and Sona Credit Master Fund Limited which are both registered in the Caymen Islands.
The creditors claim that they are owed some US$178m/€162.5m by GTLK Europe.
The creditors claim that the economic sanctions imposed on Russia following the invasion of Ukraine in February 2022 have had “a devastating effect” on the GTLK Europe Group.
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GTLK’s Europe Group’s international leasing business is headquartered in Dublin, and the firms that are sought to be wound up are at the top of the group’s structure.
The creditors claim they entered into a series of agreements to refinance the respondent firms’ debts, where they advanced significant funds to GTLK Europe Captial, of which GTLK was a co-guarantor.
After the sanctions were imposed the creditors claim there has been significant default by GTLK Europe Capital regarding it repayment obligations, specifically the requirement to repay interest due on the loans.
The creditors claim that the group has not satisfied their demands for repayment.