VZBT may accelerate bankruptcy

The bankruptcy procedure of the Volgograd Drilling Equipment Plant (VZBT) has reached the stage of creditors challenging each other's mutual rights. At the same time, the VZBT Trading House also entered the process, which lays claim to a significant part of the requirements for the plant. According to some assumptions, this may indicate the owners’ interest in completing the bankruptcy of VZBT as soon as possible. At the same time, the current development of the procedure will inevitably lead to another year of VZBT downtime, unless a “political decision is made” to provide the plant with orders in the coming weeks.

The head of the regional committee of industry and trade, Roman Bekov (back), and State Duma deputy Oleg Savchenko discussed various measures to save VZBT, but the owner of the plant will most likely go through bankruptcy
Photo: Yaroslav Malykh, Kommersant

The Twelfth Arbitration Court of Appeal (Saratov) returned the appeal to Volgograd Drilling Equipment Plant LLC (VZBT) against the ruling of the Arbitration Court of the Volgograd Region. This was done at the request of VZBT itself. The bankrupt plant tried to challenge the Volgograd arbitration ruling dated September 16, according to which Sberbank's claims against the bankrupt plant were approved and included in the third stage of the register for a total amount of 1.37 billion rubles, of which 1.18 billion were secured by a pledge of the debtor's property. The list of collateral includes more than 600 items - equipment and elements of the plant’s infrastructure, as well as six units of unfinished drilling rigs in a degree of readiness from 69 to 95%.

As industry experts explained, the key subject of the dispute could be the drilling rigs, the potential value of which is several times higher than that stated in the collateral mass. It should be noted that companies in the oil and gas sector traditionally hold major tenders for the supply of drilling rigs in November. “If this chance, conditionally until November 20, is missed, then VZBT will not work in 2016,” a source in one of the oil service companies told Kommersant. “In recent months, the plant had to actively prepare for auctions; I doubt that they were this in the context of bankruptcy disputes.”

One of the lawyers, who had previously participated in several processes related to the VZBT, explained to Kommersant that the appeal of the ruling itself did not imply the suspension of its validity. “This does not in any way prevent Sberbank from exercising its powers as a creditor,” the interlocutor explained, “in this regard, it is not clear why VZBT withdrew the complaint even before the court decided to impose interim measures. If at the same time a lawsuit was filed to appeal the claims of other creditors and a ban on holding a meeting of creditors, then this could be explained.” According to observers, the discrepancies concerned the size of the claims supported by the pledge and, possibly, the value of the property included in the pledge mass. The total amount of VZBT's debt to Sberbank is not in dispute - it is approved in the settlement agreement. “The withdrawal of the complaint may be due, among other things, to agreements with other creditors,” notes Pavel Gerasimov, partner at the Padva and Epstein law office.

VZBT LLC is one of the largest enterprises in the industry; previously more than 3 thousand people worked at the plant. The company designs and produces drilling, blowout prevention and other oil and gas equipment. 100% of the company's capital belongs to the Cyprus offshore company Redzim Campaigns LTD. The book value at the end of 2013 was 2.9 billion rubles.

Let us remind you that VZBT’s bankruptcy was opened in May of this year, it has 32 creditors, the total amount of overdue accounts payable is 3.1 billion rubles. Moreover, the plant has not actually been operating since 2014. What led to the shutdown of the enterprise was that in 2012–2013. he failed to fulfill a large order for Surgutneftegaz, the key reason for which was the plant’s high level of debt, while the terms of the contract did not imply prepayment. Several administrative and criminal cases were initiated against the management of VZBT for non-payment of wages. Let us note that the general director of the plant, Nikolai Zatsarinny, has repeatedly stated that, subject to government assistance in securing orders, VZBT is ready to pay off all debts in a few months. Let us recall that in December 2014, the governor of the Volgograd region, Andrei Bocharov, said that the owner of VZBT, who is unknown to him, should pay his debts and “hand over the enterprise into state ownership.” Then observers regarded the words of the head of the region as populist and aimed at a public not privy to the mechanisms of functioning of the industry market. In response to such actions by the authorities, the general director of Naftagaz OJSC Tokai Kerimov announced that he was the sole owner of the plant and proposed cooperation in bringing the enterprise out of the crisis. The measures proposed by the parties did not help the plant, and VZBT initiated its own bankruptcy procedure.

VZBT management does not comment. It was not possible to obtain an explanation from Naftagaz. At the same time, an informed source in the regional administration explained to Kommersant that VZBT’s creditors, with the exception of the largest, Sberbank, which insists on unconditional repayment of debts, can act in the interests of the potential new owner of the plant. According to the interlocutor, a company “closely connected with Gazprom” could be considered as a contender for the asset.

A member of the State Duma Committee on Industry, Oleg Savchenko, told Kommersant that the owner of VZBT refused to meet with him already scheduled. “In the current situation, a political decision is needed - only agreements with oil and gas enterprises will allow the plant to receive orders in order to retain the staff, without which VZBT simply will not exist. This is a joint task of VZBT and the authorities; now the plant will not be able to receive orders without their guarantees.” According to Mr. Savchenko, he is aware of a number of negotiations and “various protocols” that did not lead to real results. “It’s time to make an actionable decision at a high level,” he added.

Yaroslav Malykh

Sberbank heads creditors