The Arbitration Court of Moscow has ordered VK to pay $1.1 million to UK "Pervaya" for non-compliance with Presidential Decree No. 430 on the replacement of Eurobonds. The decision sets a precedent: for the first time, a court has recognized that a Russian company that is not an issuer but is controlled by a foreign owner bears independent responsibility to bondholders.
In 2020, VK Company Limited issued $400 million in Eurobonds. After the introduction of Decree No. 430 in 2022, issuers were required to transfer debts into rubles or issue Russian bonds by 2024. VK replaced the securities only in October 2023, although UK "Pervaya" (formerly "Sber UA") had been demanding payments since December 2022.
Guided by Articles 16, 17, 28, 102, 110, 167-171, 176 of the Arbitration Procedure Code of the Russian Federation, the arbitration court RESOLVED: To recover from LIMITED LIABILITY COMPANY "VK COMPANY" (125167, MOSCOW, LENINGRADSKY PROSPECT, 39, BLDG. 79, OGRN: 1097746572813, OGRN Assignment Date: 09/28/2009, TIN: 7714789489) in favor of JOINT-STOCK COMPANY "MANAGEMENT COMPANY "PERVAYA" DU (123112, RUSSIA, MOSCOW, V.N.TER.G. MUNICIPAL DISTRICT PRESNENSKY, PRESNENSKAYA NAB., 12, FLOOR 40, OGRN: 1027739007570, OGRN Assignment Date: 07/22/2002, TIN: 7710183778) damages in the amount of 1,129,123.48 US dollars
The court noted that many companies complied with the decree voluntarily, while VK delayed the process. The company disagrees with the decision and intends to appeal it. Experts call the verdict significant for other Eurobond disputes. It confirms that Russian investors can recover debts from local legal entities associated with foreign issuers.
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