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The Managing Partner of S&K Vertical Konstantin Krutilnikov comments on the situation regarding the hostile takeovers in the state of crisis for RBС

8 June 2009

The current financial and economic crisis – according to the opinion of the experts - establishes new opportunities for the hostile takeovers and raider attacks. Whether they be used or not depends on the attractiveness of the subject to the attack and financial opportunities of the raiders.

“The critical number of unexecuted obligations and increase of the commercial conflicts may result in new turn of raider activity" – explains the attorney at law, the Managing Partner of the law firm S&K Vertical Konstantin Krutilnikov.

According to the source of information close to the banking sphere, the banks and collecting agencies take a lead in the list of sources of the “increased danger” for the reason they have huge property demands in their hands. Business development by means of the borrowed capital resulted on one hand in impetuous increase of the companies and on another hand – in huge amounts of debts before the creditors. The excess of raiders to such debts constitutes the risks of hostile takeovers and raider attacks.

“Judicial debts collection, charge on the subject of pledge, using the bankruptcy procedure – all these are the common means of the bona fide creditor’s rights protection focused on repayment and damages settlement” – explains K. Krutilnikov – “And when the debts are used in order to obtain the control over the company by means of illegal and criminal tools – one faces the raider activity”.

Along with that, according to Alexey Vasilyev, the Partner of the independent consulting group “Financially authorized company of anti-crisis management ”, "the main instrument of the unfair creditors while executing the hostile takeover o the company shall be the bankruptcy procedures”. "During the 17-year period of Russian insolvency (bankruptcy) legislature existence the federal act has passed the way from focusing on the protection of the bankrupt debtor to the pro-creditor’s one, defending dominantly the rights of the creditors” – considers the expert.

Alexander Osinovsky, the member of the expert council of the Interdepartmental commission on economic security at the St. Petersburg Government , believes that the most frightful moments are left behind: “The peak of the raider activity in Petersburg fell at the years 2006-2007. The law enforcement agencies successfully suppressed the criminal activity of different raider groups, and since then the technology of the raider attacks has become less criminal and correspondingly more expensive”.

"Raider activity has always been considered as a risky though highly profitable way to invest money” – ascertains the expert. “It seems to me that the crisis left a mark on the raider activity: it is vividly seen in the fact that there appears a lesser temptation to invest money in the risky operations in the state of monetary funds’ deficit ” – resumes A. Osinovsky.

"Methdologically these phenomena are hardly comparable” – comments Oleg Kosatenko, the Deputy Chief of the Main Investigation Department at the Central Internal affairs’ administrative board of St. Petersburg on the situation and considers the cause-effect relation between the two phenomena to be unobvious one. "The increase or decrease of amount of raider attacks do not directly depend on the crisis events -he believes. – There is a possibility of a mere narrowing the scale of this criminal activity, as in the lack of liquidity everyone, including raiders, has to use the money sparingly".

"One may fight with raider activity in different ways, but there is only one way to extirpate it – through defeating the corruption” – resumes K. Krutilnikov.

RBС


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