Why oligarch assets are on the table if Russia defaults on debt
BNN Bloomberg
“This is an express train going directly towards the concrete wall with nobody able to – or inclined to – assist it."
As Russia barrels toward a massive debt default, the country’s richest oligarchs could potentially see their mansions, yachts and investments seized as a result of some “clever lawyering,” according a sovereign debt professor.
“The most well-to-do litigators know how to attribute the assets of individuals to the state if there's enough connection between the state and those assets. You can make an argument that the assets are, in effect, the assets of the state and you should be able to go after them,” said Mitu Gulati, a sovereign debt professor at Virginia School of Law, in an interview Tuesday.
“We've seen this kind of litigation before. It's hard to do, but if you have good enough lawyers, it can be done,” he added. “This is where clever lawyering comes into play.”
Russia’s debt rating has been cut to junk status as global sanctions stemming from President Vladimir Putin’s invasion of Ukraine hammers the country’s economy and its currency.
Russia is due to pay US$117 million in interest on U.S.-dollar bonds Wednesday morning – leaving investors around the world doubtful it will be able to meet its obligations. If Russia doesn’t pay, a debt default could be triggered after a 30-day grace period.
“I think it's quite clear that they are unlikely to pay the interest [Wednesday], thanks to the sanctions. Even though they have the money to pay, they're not going to be able to pay in the currency that they are required to pay,” Gulati said.
