“Svyaznoy” was mired in debt and was on the verge of bankruptcy

One of the largest retailers of mobile devices in Russia, the Svyaznoy company, was on the verge of bankruptcy due to the war in Ukraine and the sanctions that followed it. The company has faced a large number of lawsuits totaling 14.26 billion rubles and is experiencing financial problems amid difficulties with the supply of goods to Russia. Vedomosti drew attention to her difficult financial situation.

Since the beginning of the year, the company has received 79 claims, the amount of claims for which is 14.26 billion rubles, follows from the SPARK-Interfax database. Claims come from the partners of Svyaznoy – creditor banks, distributors, lessors and logistics companies. In particular, Merlion, a supplier of electronics and household appliances, is demanding 5.6 billion rubles from the company, Alfa-Bank – 6 billion rubles, and Sovcombank – 2.4 billion rubles. Companies and banks do not disclose the details of the claims, noting only that they continue negotiations and are looking for a way to pre-trial settlement of cases.

Nevertheless, Alfa admitted that the reason for the lawsuit was the refusal of the Svyaznoy management to pay off the debt. Difficulties with repayment were indirectly acknowledged by Sovcombank, noting, however, that together with representatives of Svyaznoy they are looking for possible solutions. The problems in the company are indirectly indicated by a debt of 1 million rubles to Rostelecom for the supply of communication services back in 2019-2020.

Experts interviewed by the publication attribute the retailer's problems to the consequences of the war in Ukraine – the sanctions imposed, the departure of foreign companies, as well as logistical problems and difficulties in finding new partners. Moreover, Svyaznoy has not fully recovered from the effects of the pandemic, when many chains suffered due to the closure of retail outlets and showrooms.

Marina Malakhatko, head of the CORE.XP retail department, attributes the increase in the number of lawsuits to the fall in Svyaznoy's operating revenue: the company simply does not have enough money to cover all expenses, from rent and purchases of new goods to staff salaries. The nature and number of lawsuits, in her opinion, testify to the pre-bankruptcy of the company. Moreover, other retailers may also face similar problems, she says, since parallel imports have not yet given the effect that they expected – it is far from always possible to replace imported equipment even with Chinese counterparts.

“The network has been living in a “minus economy” for a long time – it has accumulated debts, so there is a possibility of bankruptcy,” said Eldar Murtazin, chief analyst at Mobile Research Group.

In his opinion, the company will also have difficulties with on-lending in other banks, as the problems are too big and have reached the public space. At the same time, the analyst does not believe in the bankruptcy of the company, since the shareholders of Svyaznoy are Megafon and Solvers. According to Murtazin, the bankruptcy option is unacceptable for everyone, since in this case no one will receive their funds. Svyaznoy is also on the side of Russian legislation, which allowed the company during the pandemic to take advantage of the moratorium on bankruptcy, which is valid until October 2022. At the end of 2020, the company employed more than 20,000 employees.

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