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Vnesheconombank ’s approach to bad debts aims at restoring the debtors’ solvency

19 september 2017 года
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Vladimir Nazarenko, Director of Vnesheconombank's Legal Assistance and Defence Department, spoke at the Bankruptcy Framework in Russia third annual conference.

As part of the Bankruptcy Procedures session, he told about how foreign law regulations may apply in bankruptcy cases. According to Mr. Nazarenko, by deeply analysing the fine points of bad debt management and by using innovation, proactive lenders can lead the way even in the most difficult projects.

VEB has been addressing multiple strategies of handling troubled and non-core assets, given their state, operating performance, market value and the effective demand for the assets. Every such strategy is always chosen so that the interests of the Bank and the state are balanced in the best way. This can be achieved by restructuring, sale to a strategic investor, development of the asset by the Bank itself and, likely, by making further investments if there is a potential to increase the market value of the asset. Sometimes, the Bank may opt to declare an asset to be in default. At the same time, VEB extensively focuses on communicating with all parties concerned throughout the stages of bad debt management process so that to find a mutually beneficial solution.

The Bank’s proactive stand on managing bad debts, including via default mechanisms, is covered as a major aspect in the VEB Strategy 2021. Vnesheconombank has also established a Bad Debt Management Committee.

“Today, Vnesheconombank’s portfolio of distressed assets comprises mostly projects that are crucially important as pillars for Russia’s wellbeing and stronger national economy both nation-wide and locally. Some of the VEB troubled debtors are critically important strategic companies and businesses, or local economic mainstays. That is why the Bank should take a carefully balanced approach when developing a debt settlement strategy, primarily basing on the social responsibility practices. In our work with distressed debts we aim to restore the debtors’ solvency which may be followed by controlled transfer of such asset to the ownership of the Russian Federation (as the case may be) or its sale for a consideration,” commented Vladimir Nazarenko.


A success case here is a series of procedures in respect of federal-level Olympic facilities performed by Vnesheconombank which resulted in a transfer of the facilities to the government on a free-of-charge basis.

Meanwhile, another bankruptcy case worth mentioning in this context is the construction of a Caspian flat glass factory in Dagestan. After the debtor’s bankruptcy had been initiated following the third party lender’s claim, VEB took control over the bankruptcy and administrated the bankruptcy proactively by becoming a major owner of the asset and assuming the equity risk. The project proved to be a success, as after 2016, operating profit was derived by the factory that was able to keep the existing and create new jobs.


Press Office
E-mail: press@veb.ru


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