UPDATE: VEB to bankrupt Tractor Plants, affiliate plants

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MOSCOW, Oct 5 (PRIME) -- Russian state development bank Vnesheconombank (VEB) will file bankruptcy suits against troubled machine producer Tractor Plants and its affiliates, including Kurganmashzavod, as seen by PRIME on Thursday in the materials of a unified register of legally important information on activity of companies.

“On the basis of articles 2 and 2.1 of the federal law on bankruptcy, VEB notifies of its intent to file a claim to an arbitration court asking to acknowledge limited liability Company of Corporate Management of Tractor Plants Concern financially insolvent, or bankrupt,” the materials read.

VEB CEO Sergei Gorkov told reporters that the supervisory board decided to introduce a “default strategy” at Tractor Plants. The default strategy implies recovery of debts of the troubled asset enforced by court.

“We’ve decided on a default strategy for Tractor Plants, it is the most important decision for the plant. Our goal now is to ensure that the plant does not stop, that it continues its work and activity,” Gorkov said.

In September, Kommersant business daily said that VEB’s management has acknowledged that a December bail-out plan adopted to maintain major production assets of both military and civil departments of the company, which included cash injections to clear wage, tax and power debts, has failed, Kommersant said.

The military division was moved under control of state industrial corporation Rostec, and Tractor Plants Concern co-owners Mikhail Bolotin and Albert Bakov obtained control over the civil division to set up on its basis the Machine Building Industrial Group, whose debt amounts to 85.4 billion rubles including 58.5 billion rubles owed to VEB.

Also in September, CEO of Rostec Sergei Chemezov said that Tractor Plants must be declared bankrupt because financial recovery procedures would be of no use.

(57.7832 rubles – U.S. $1)

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