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LTL 1.9 billion recovered in two years since Snoras bankruptcy
2013-12-06
Payments to creditors will depend on the outcome of litigation
In the two years since Snoras bank went bankrupt, the team led by bankruptcy administrator Neil Cooper recovered nearly LTL 1.9 billion in bank assets and funds: several Snoras subsidiaries were sold, a complex loan scheme was investigated and money recovered, real estate belonging to the bank was offered for sale along with foreclosed properties, and there has been a regular flow of loan repayments. According to the bankruptcy administrator's latest report, LTL 136.7 million was recovered to the bank in the third quarter of 2013.
On 7 December 2013, it will be two years since the institution of the bankruptcy proceedings against Snoras bank. The Vilnius Regional Court passed an order to commence insolvency proceedings against the bank and 7 December 2011 Neil Cooper was appointed as Snoras bankruptcy administrator.
"Two years has passed. It is a relatively short period of time in such a large-scale and complex bankruptcy process of an international financial group that used to be the Snoras group. The bank itself was only the pinpoint of a structure. It was designed to collect money locally, but many of the most valuable bank assets were in jurisdictions outside Lithuania, including various tax havens, and we were led to these by tracing numerous intricate payment schemes.
In this period, we sought to locate bank assets and realise funds so that they could be returned to creditors. We discovered numerous possible cases of fraud, theft and embezzlement that are currently being looked into by us and law enforcement authorities in Lithuania and other countries. It is very clear that the actions of the former bank shareholders were the main cause behind the collapse of the bank", says Neil Cooper, Snoras bankruptcy administrator.
LTL 2.4 billion in courts
Until now, all claims of first ranking creditors (Snoras staff members) have been fully met and LTL 9.3 million was paid to them in the Snoras bankruptcy procedure. LTL 300 million was paid to the second ranking creditor, the State company Deposit and Investment Insurance, and further payments will be made according to the court approved schedule.
The extent of any payments to lower ranking creditors will, however, only be known once the litigation is progressed and it is assessed what funds are available.
"High value assets, although shown in the balance sheet as being owned by the bank, were in fact embezzled. Therefore, claims of lower ranking bank creditors can only begin to be settled if legal disputes are resolved in our favour and we manage to recover these assets and funds from former shareholders, associates and other parties”, says the bank's bankruptcy administrator.
According to Neil Cooper, whilst the eventual recoveries remain uncertain the value of filed legal claims currently stands at around LTL 2.4 billion. The administrator's team managed to obtain a worldwide freezing order of LTL 1.7 billion against the assets of one of the former Snoras shareholders in support of certain legal claims.
In addition to a legal dispute against Julius Baer bank in Switzerland for the recovery of LTL 829 million in embezzled Snoras assets, the team is also investigating potential claims against other Swiss Banks. The bankruptcy administrator has also undertaken legal action in relation to Russian bank Investbank and in relation to Snoras funds deposited with the Ukrainian bank Conversbank.
According to the bankruptcy administrator, good progress has been made in negotiations over the restructuring of a number of loans which were ultimately provided to Latvian airline Air Baltic Corporation. Neil Cooper believes that a successful conclusion of these negotiations will be reached soon.
The bankruptcy administrator's team also managed to unwind a loan transfer scheme involving funds registered in Cyprus, the Cayman Islands and the British Virgin Islands and action in relation to this has returned assets and loans with a realisable value of over LTL 180 million. LTL 73 million has already been recovered from these funds and further recovery procedures are underway.
Sale and recovery of assets continues
During the insolvency procedure, Snoras assets were discovered in 19 international jurisdictions and real estate properties were located in 7 foreign countries. The total value of owned and foreclosed real estate in Lithuania and abroad which is currently being offered for sale by the bank is LTL 185 million. The process of sale of these real estate properties at different phases was launched in summer.
During the bankruptcy administration period, the bank's subsidiaries Snoras Media (which had a 34% interest in the Lietuvos Rytas media group), Snoro Lizingas and the Snoras minibank network were sold to different buyers. The total value of these deals is LTL 87 million.
Since the beginning of bankruptcy, 50 vehicles belonging to the bank were sold, including two luxury Spyker sports cars. In total, the sale of vehicles generated LTL 1.7 million and another LTL 1 million was recovered from the sale of other movable property of the bank, including firearms and collectible coins.
The team of the bankruptcy administrator continues active monitoring of the bank's loan portfolio. Since the beginning of bankruptcy, LTL 1 billion has been received in loan repayments and interest, including LTL 124 million in the third quarter of 2013.
In the two years since the beginning of bankruptcy, the number of bank employees was reduced tenfold from 1,385 to 139. Until now, 10 bank branches have operated at minimum capacity, mainly monitoring and administering the loan portfolio.
The costs of ensuring the operation of the insolvent bank in the third quarter of 2013, which include maintenance of the bankruptcy administrator's team and bank specialists, units and systems, continued to fall and totalled LTL 15.7 million (including value added tax), or LTL 5.2 million per month on average, down by 19% compared to the average monthly costs paid in the second quarter of the year.
Creditors from 53 different jurisdictions all over the world have filed over 28,500 claims against the insolvent bank for the total amount of LTL 6.7 billion.
Further realisations and litigation awaits
According to Neil Cooper, his team plans to complete the sale of Finasta banking group and negotiations with three potential buyers are currently in progress.
An initial period of exploratory marketing has also been commenced in relation to the sale of the Snoras loan book, and sales of bank owned and foreclosed assets will continue. Litigation should also progress against numerous parties.
"It will be an exciting time going forward as we progress some important and sizeable asset realisations and look to further the litigation”, says Neil Cooper.
Rita Saunorytė Norutienė
Publicum FComm
Tel. +370 5 249 9087
Mob. +370 682 95377
r.norutiene@publicum.lt
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