JSC Alliance Bank Files for U.S. Court Protection

Feb. 16. Bloomberg

By Dawn McCarty and Don Jeffrey

JSC Alliance Bank Files for U.S. Court ProtectionJSC Alliance Bank, the sixth-largest bank in Kazakhstan by net loans, filed for Chapter 15 bankruptcy to protect itself from U.S. lawsuits and creditor claims while it reorganizes at home.

The Almaty-based company listed both debt and assets of more than $1 billion in documents filed today in U.S. Bankruptcy Court in Manhattan. JSC “experienced severe liquidity difficulties” following the worldwide financial crisis, according to the papers.

Kazakh banks have struggled to sell property acquired after foreclosures on bad loans, according to the National Bank of Kazakhstan’s quarterly survey of banks released this month. JSC went into default on lending agreements starting last March and negotiated a restructuring plan that was approved in December by creditors holding more than 94 percent of claims, according to today’s filing.

Having U.S. courts recognize the Kazakhstan reorganization effort will “prevent the risk of parties taking action against the bank or seeking attachments over the bank’s assets that are located in the United States,” Maxat Rakhimzhanovich Kabashev, chairman of JSC’s management board, said in the filing.

Plan Approved

The Republic of Kazakhstan, Central Asia’s biggest energy producer, has owned JSC since Dec. 30. Kazakhstan regulators approved the restructuring plan on Feb. 1. The plan, covering more than $5 billion of debt, may become effective in March, according to today’s filing.

The plan gives unsubordinated creditors the option of either taking payment equal to 22.5 percent of the amount of their claims or receiving notes with a principal amount equal to 100 percent of claims.

Affiliate JSC BTA Bank, Kazakhstan’s second-largest lender by assets, filed for bankruptcy protection on Feb. 4 to shield itself from U.S. creditors as it restructures about $11.6 billion in debt.

Law firm White & Case LLP, based in New York, is representing JSC Alliance in the Chapter 15 case.

The case is In re JSC Alliance Bank, 10-10761, U.S. Bankruptcy Court, Southern District of New York (Manhattan).