Sanctions Slow Down Biggest Liquidation in Ireland
The €4 billion liquidation of two major Irish-based companies has hit a roadblock due to international sanctions. These companies, GTLK Europe and GTLK Europe Capital, were owned by a Russian state-controlled parent company. After Russia’s invasion of Ukraine, sanctions were imposed by governments around the world — including the United States.
In 2023, an Irish court ordered both companies to be shut down after they failed to repay debts. Creditors were owed nearly $180 million, and bondholders had claims on more than $3.25 billion worth of issued bonds. That made this case the largest corporate liquidation ever in Ireland.
The two companies controlled a large number of valuable assets. These included about 70 airplanes and 19 ships. Combined, these assets were estimated to be worth around €4 billion.
But the liquidation process, which should involve selling off assets and paying creditors, has not gone smoothly. International sanctions, especially those from the U.S., have created big hurdles. The companies are on a list of sanctioned entities maintained by the U.S. Department of Treasury, through its Office of Foreign Assets Control (OFAC).
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Difficulties with Cash, Licences, and Buyers
The liquidators in charge of shutting down the companies are working from Dublin. They have managed to recover about €60 million directly from assets and an additional €276.2 million through “second realisations” — money that comes from later stages of asset recovery.
They also have €190.6 million in cash available. However, getting access to this money has not been easy. The liquidators need special licences from U.S. regulators to do even simple things like collecting cash or selling a plane.
While they have made progress, the licences they received are very limited in scope. This has caused delays and made even basic tasks take much longer than expected. According to the liquidators, everyday steps in the liquidation process have become extremely complicated due to these restrictions.
The sanctions have also had a chilling effect on potential buyers. Some investors and companies that were interested in buying the planes or ships have walked away. They are worried about the risks of dealing with a sanctioned entity, even if it is being liquidated.
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Waiting for Approvals and Delisting
To try and move things forward, the liquidators have submitted about 17 applications to OFAC for additional licences. These licences would allow them to continue the liquidation with fewer roadblocks. But getting approval from OFAC has taken longer than expected.
In addition, a formal application to remove GTLK Europe and its sister companies from the U.S. sanctions list was sent to the U.S. State Department in May 2024. The liquidators hope that if the companies are delisted, they can finish the liquidation faster and recover more money for the creditors.
So far, though, there has been no response to that request either. The delays continue to create problems for the people working to close the companies and return money to those who are owed.
Despite the difficulties, the liquidators say they have made strong progress in recovering assets and handling the many complex parts of the liquidation. However, the sanctions remain a major obstacle, slowing everything down and making a tough job even harder.