UK court to decide fate of Russian securities "trapped" in London
Business
Case demonstrates how Russian assets owners with nearly impossible trading are looking for ways out
LONDON (Reuters) - The administrators of Sova Capital, a defunct London broker that was once owned by a Russian banker Roman Avdeev, are seeking a UK court for permission to transfer Avdeev a large quantity of Russian securities to move illiquid Russian assets.
The case demonstrates how, a year after the start of the conflict, Russian and offshore owners of assets whose trading has been made nearly impossible by war-related restrictions are looking for ways out.
The administrators of Sova, Teneo, informed the British High Court on Monday that Avdeev intended to exchange a 233 million pound ($280.30 million) creditor claim he has against Sova for a discounted purchase of its portfolio of Russian securities which has a notional value of 274 million pounds, according to court documents.
Lawyers representing Dominanta said that they did not have orders to comment on the ongoing court proceedings when asked how to approach Avdeev for a statement.
According to Teneo attorney Mark Phillips, Sova which had given international investors access to Russian markets, had locked the portfolio of Russian equities. After a wave of sanctions hammered companies with connections to Russia last year it was placed under special management.
The legal limitations and sanctions imposed by governments all over the world have a considerable influence on a sizable portfolio of Russian stocks, Phillips told.
Furthermore, Philips noted that the majority of Russian financial institutions were subject to sanctions or asset freezes which drastically constrained the universe of possible purchasers. Hence Avdeev's offer, which was made via a company under the Russian banker's control, was the only choice, Phillips said.
According to court documents, Zilbermints argued that the proposed purchase would result in a "extraordinary violation of creditors' rights to fair treatment" and asked Teneo to keep looking into the prospect of selling the Russian assets for cash.
While they were freely marketable, Russian equities and bonds were worth tens of billions of dollars, leaving foreign investors stuck. Attorneys anticipate that affluent people and institutions would keep requesting judicial authorization for strategies to withdraw from Russian investments while abiding by penalties.
Tuesday's hearing is still going on.
