Business breakfast: Strategy for Working with Distressed Assets of Commercial Banks
Speaking engagements
Alexander Vaneev BGP Litigation partner
Dmitry Seleznev BGP Litigation partner
Anton Pomazan BGP Litigation senior associate
Organizer: BGP Litigation
Location: Sheraton Palace Hotel Moscow
Topic / Program:

9:00 – Registration

9:30 – Take the initiative or wait: whether to commence bankruptcy proceedings (form reserves) or take a wait-and-see approach (lose the initiative in the process). Anton Pomazan, senior associate

10:00 – Gray areas in the application of bankruptcy law which pose risks for banks. Anton Pomazan, senior associate

10:30 – Break

10:45 – Criminal law risks for a commercial bank's management and beneficiaries in the event its license is revoked. Dmitry Seleznev, partner

11:15 – Cross-border strategies for execution and levy against assets. Alexander Vaneev, partner

11:45 – Q&A session

Registration / Information: Kamilla Goncharova

Most of the attendees of the business breakfast were heads of major foreign and Russian (including regional) banks and financial institutions.

BGP Litigation senior associate Anton Pomazan spoke about the two main approaches a bank can take when dealing with distressed assets: forming reserves as prescribed by Regulation 254-P, and minimizing debt provisioning for distressed assets. The expert addressed the risks involved in each case of minimization of debt provisioning for distressed assets encountered in practice. He also discussed the Russian Central Bank's monitoring of loan loss reserves and the measures of influence available to it, supported by case law, when an order it has issued to reclassify loans is not complied with.

Anton Pomazan also discussed the special status accorded lender banks when filing a bankruptcy petition against a debtor through the statutory simplified procedure and in the context of satisfaction of claims secured by pledge/mortgage. 

He answered the following questions: 
- can a bank file a bankruptcy petition through the simplified procedure against a debtor if the debt originated from something other than banking operations?
- can a bank file a bankruptcy petition through the simplified procedure against a debtor that is a surety?
- can an assignee file a bankruptcy petition through the simplified procedure against a debtor if the bank assigned its right of claim under the respective loan agreement?
- is the status of secured creditor restored when the acceleration of a loan secured by pledge/mortgage is successfully challenged?
- can repayment of an interbank loan be challenged as a preferential transaction?  

BGP Litigation partner Dmitry Seleznev covered various issues encountered in white collar defense matters. He noted that if legal advice is obtained promptly, then criminal charges can possibly be reduced or avoided entirely. He also noted that many aspects of bankers' day-to-day work indirectly involve a degree of risk. If from a lawyer's perspective such work carries with it the risk of arbitration or litigation, an investigator may find that the "civil law relationships" involved contain or comprise elements of an offence. For example, in a developed commercial arrangement law enforcement officers may single out a particular action, a questionable (in their view) detail or a specific contractual provision and treat it as a crime. In such cases it is advisable to proactively prevent the risk from materializing rather than dealing with the situation post factum. It should be analyzed beforehand the extent to which a particular contract or actions taken through several organizations could potentially lead to criminal charges. In-house lawyers, says Denis Seleznev, are generally not prepared to advise beneficiaries on criminal law risks. The advice of external legal advisors is needed.

BGP Litigation partner Alexander Vaneev gave a presentation on specifics of cross-border disputes and execution and levy against assets when they are located in various jurisdictions. Alexander noted that the main difficulty in such cases stems from the multiple parallel proceedings, some of which may be of primary importance, while the others are ancillary. In such situations debt recovery can be maximized through the extensive use of various mechanisms available under the legislation of other countries, including interim measures, court orders directing third parties to pay the debt to the creditor, court orders to disclose information, assistance to foreign courts in proceedings held abroad, etc. The impact of mechanisms was examined in detail based on practical examples (the BTA Bank case, the International Industrial Bank case etc.). Finally, Alexander Vaneev discussed recent trends with regard to recognition and enforcement of Russian judicial decisions abroad.