December 20, 2018 / 4:19 PM / 6 months ago

UK appeal court backs Sberbank, Franklin Templeton on IBA debt restructuring

MOSCOW, Dec 20 (Reuters) - A British court of appeal backed Russian lender Sberbank and asset manager Franklin Templeton in a ruling relating to funds owed by the International Bank of Azerbaijan (IBA), potentially scuppering the latter’s restructuring plan.

In 2017, state-run IBA proposed a plan to restructure $3.3 billion of its debt and said in July it had received approval from creditors holding 93.9 percent of the affected credits.

As part of the restructuring, which was done under Azeri law, IBA had obtained a moratorium from a London court, preventing creditors from taking action against it without court permission.

In an initial ruling in January, a London court backed Sberbank and Franklin Templeton, which opposed the extension of this moratorium. However, IBA appealed the ruling.

Neither Sberbank, the sole lender of a $20 million facility to IBA, nor Franklin Templeton, which holds some of the lender’s 2019 notes agreed to the restructuring.

Both holders argued their dealings with IBA were governed by English law and in its ruling on Monday, the court of appeal backed them.

“The purpose of the application, as is candidly conceded, is to prevent the English creditors from relying on their rights under English law to seek to enforce their claims against the company’s assets,” the court ruling stated.

Sberbank’s vice president Maxim Degtyarev told Reuters the Russian lender would now seek to enforce payment. IBA holds a stake in IBA-Moscow which is headquartered in the Russian capital.

“Now Sberbank has the right to collect the debt from IBA in full, including interest and penalties,” Degtyarev said.

IBA declined to comment on the ruling. (Reporting by Tatiana Voronova in Moscow, writing by Karin Strohecker in London; Editing by Elaine Hardcastle.)

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