A New York court has agreed to support the International Bank of Azerbaijan (IBA) during its process of restructuring of some $3.3 billion in debt.
The decision was handed down on May 12.
IBA lodged the appeal to protect four U.S.-located, “correspondent accounts” that are used to complete various dollar-denominated transactions, Bloomberg reports.
The bank sought chapter 15 protection, a part of the US bankruptcy code that covers international insolvencies and the court decision entails that foreign creditors will not be able to make claims against the assets of the International Bank of Azerbaijan (IBA) during the reconstruction process.
Khalid Akhadov, chairman of the IBA’s board, has welcomed the court decision.
“Our appeal was granted by the court, and this shows that we are taking the right steps to successfully complete the restructuring process”, Akhadov was quoted by local media as saying.
The IBA has suffered from severe losses over the last few years due to the the decline in world oil prices and subsequent currency fluctuations. Therefore the bank undertook a process of voluntary restructuring in order to address its deteriorating financial position.
“IBA is in a difficult financial position, as our financial results for 2016 will show. However, I am hopeful that with the support of holders of our foreign currency obligations for our restructuring plan, the future financial viability of the Bank can be assured”, Akhadov was quoted in an official statement of the bank as saying.
Samir Sharifov, the Minister of Finance of Azerbaijan underlined the importance of the restructuring process.
“The Ministry of Finance has noted with concern the deteriorating financial and capital position of International Bank of Azerbaijan. Re-establishing the financial viability of IBA is critical so that the Bank can continue to provide important banking services to the Azerbaijan economy. The steps that are currently being taken by the Bank are essential for achieving financial stability, and are being undertaken with the full support of the Ministry of Finance”, Sharifov said in an official statement
The International Bank of Azerbaijan was established in 1992 in Baku. At present it is the largest bank in Azerbaijan and it has 36 branches and employs around 1500 people.