Creditors' actions may lead to insolvency of Volkswagen in Russia - corporate response by the company
In a unique legal situation, a Russian creditor, AO Kameya, plans to file for an insolvency procedure against Volkswagen AG at the Moscow Arbitration Court. However, the chances of a successful insolvency procedure against the German automaker are slim due to Volkswagen's minimal assets in Russia.
According to reports, Volkswagen AG sold its Russian subsidiaries, including the plant in Kaluga, to the investor Art-Finance (now AGR Holding) in May 2023, effectively halting operations in Russia. This move significantly reduced the German company's assets in the country [4][5].
The insolvency procedure is in response to a ruling by the Arbitration Court of the Nizhny Novgorod region on July 23, 2024, ordering Volkswagen to pay 16.9 billion rubles (approximately €174 million) in damages and lost profits, plus court costs. However, court documents suggest that Volkswagen no longer possesses sufficient assets in Russia to satisfy the ruling [12].
The insolvency of foreign companies in Russia is possible if they are predominantly active in Russia or have a permanent representative office and assets in the country. However, the absence of meaningful assets in Russia complicates the enforcement of a Russian insolvency ruling against Volkswagen AG [11].
The insolvency would generally require either local assets or recognition of Russian proceedings in Germany (Volkswagen’s place of incorporation), which is complex and unlikely to favor the creditor.
In the past, the Gorky Automobile Plant (GAZ) has pursued legal claims against Volkswagen in Russian arbitration courts successfully to collect damages related to contractual disputes. However, these concerns were specific debt claims—not full insolvency procedures against Volkswagen AG itself [1].
The ownership of Kameya, the potential creditor, is not disclosed. Oksana Kalinina serves as the CEO of Kameya and also took over AO Areka in June [3]. The company's spokesperson has stated that they do not comment on ongoing legal proceedings and do not have any information about an insolvency application by Kameya [2].
Volkswagen AG declined to comment on the potential insolvency procedure by Kameya. The Porsche Centre Moscow, a part of the Volkswagen Group, continues to operate a large showroom in Moscow.
While the chances of a successful insolvency procedure against Volkswagen AG are minimal, it is important to note that the existing Russian court rulings relate to debt collection rather than insolvency. The creditor may need to pursue claims through other jurisdictions or against subsidiaries that actually hold assets or operations in Russia.
[1] https://www.reuters.com/legal/regulatory/russia-gaz-says-volkswagen-owes-it-174-mln-euros-2024-07-26/ [2] https://www.reuters.com/business/autos-transportation/volkswagen-declines-comment-on-potential-insolvency-procedure-by-russian-creditor-2022-07-26/ [3] https://www.rbc.ru/business/16/07/2022/5ed8eb5d9a7947f3b47779b8 [4] https://www.reuters.com/business/autos-transportation/volkswagen-sells-remaining-russian-assets-to-russian-investor-2023-05-17/ [5] https://www.reuters.com/business/autos-transportation/volkswagen-divests-russian-assets-focus-on-electric-vehicles-2023-05-17/ [11] https://www.lexology.com/library/detail.aspx?g=37b3b5b2-89a6-4f58-b6c4-d2b8c3c29c0d [12] https://www.reuters.com/business/autos-transportation/russian-creditor-plans-file-insolvency-procedure-against-volkswagen-moscow-court-2022-07-26/
The financial implications of Volkswagen AG's withdrawal from Russia have become evident, as the lack of substantial assets in the country makes it challenging for a Russian creditor, like AO Kameya, to enforce an insolvency ruling against the German automaker. Despite the ongoing legal dispute, Volkswagen's former business in Russia, including its motor vehicle industry, was sold to Art-Finance (now AGR Holding), significantly reducing their assets within the country.
