Funded Asset Tracing

General information: According to various calculations the outflow of capital from Russia in 2014-15 amounted to approximately $100 billion. Part of this capital consists of loans from Russian banks and other credit organisations.

The majority of these loans were provided under guarantee of beneficial owners of business.

The main problem: Debts inside Russia can be chased up and paid back, but this process is problematic outside the CIS for various reasons:

1. The complexity of working simultaneously in different jurisdictions 

2. The lack of reliable local contractors (legal contractors and others) and building communications with them 

3. The difficulty of predicting the amount of time likely to be spent and lack of guarantees.

At minimum expense and risk we can help repay/reconstruct debts by tracing creditors’ assets located outside the Russian Federation.

How do we achieve this

By working with litigation funders and ATE insurers who take on the financial risk on your behalf
By cooperating with local and international legal firms worldwide
Attracting partners who specialize in international tracing of assets in continental Europe (including Eastern Europe), Turkey, England, USA, Canada, Cyprus, BVI, New Zealand, Hong Kong and other jurisdictions.

Necessary conditions

The debtor has defaulted
The creditor has sued the debtor in the Russian courts to obtain judgment against the debtor and enforcement against the debtor’s assets in Russia
A substantial sum is involved $15 million or more (in which case a litigation funders are invited to work on this)
The debtor may hold or have transferred assets abroad
The main asset recovery is likely to take place outside Russia
The creditor wants to recover his money without suffering the cost and risk of litigation.

How does this work

Step 1: The creditor submits documents relating to the debt (documents confirming the credit arrangement, plus the judgment of the Russian court and the writ of execution).

Step 2: The creditor presents a non-reimbursable initial investment:

for tracing of assets by detectives 
for evaluation of the legal basis of the dispute.

Step 3: Detectives carry out a search on the debtor and his assets, hidden outside the Russian Federation.

Step 4: An assessment is made of the likely outcome of the court case in each relevant jurisdiction, and the lawyer submits his report based on this information.

Step 5: We report in good faith to litigation funders (LF) on the legal merits of the case and the prospects of success.

Step 6: If an agreement is reached, LF covers all court costs in Russia and abroad.

Step 7: As a result, usually the creditor receives 65-70% of the returned debt, LF receives – 30-35%.

Main comments

1. The work may be carried out in relation to a pool of debtors. All work is carried out on the principle of “from simple to complex”: as our practice shows, debtors do not usually use expensive instruments to keep their ownership of assets abroad confidential or anonymous. Correspondingly, MGAP and detectives first of all carry out a selection and priority start up of litigation against those debtors owning assets abroad via the simplest and most transparent instruments that are available through the local law. It does not require much research to uncover assets and ways of linking them to the debtor.

2. In order to start work the creditor must hand over to MGAP all information about the debtor held by the creditor, including information regarding the setting up of loan facilities.

For more information, please, contact

Sergei Grachev, Managing Partner

Amiran Gogiberidze, Partner