"The Chain Will Be Set In Motion": SBU General Predicts A Crisis In Russia

The consequences will be serious.

How might the bankruptcy of the Wildberries marketplace and “Putin’s wallet” companies threaten the Russian economy? The website Charter97.org posed to Major General (Res.) of the SBU Viktor Yagun:

— There are indeed financial difficulties surrounding Wildberries. After several warehouses were damaged, Russian authorities began discussing possible measures of state support for the company and its affiliated entrepreneurs. Wildberries’ financial statements show hundreds of billions of rubles in liabilities, although the company itself claims that its debt burden remains manageable. Thus, having a large amount of debt does not automatically mean bankruptcy.

But if this major marketplace does become insolvent, the consequences will be severe. Hundreds of thousands of sellers, pickup point owners, logistics companies, banks, and suppliers will be affected. Chains of non-payment will emerge, tax revenues will decline, and the government will have to bail out the company through loans from state-owned banks, tax breaks, or budget subsidies.

This would not necessarily lead to the immediate collapse of Russia’s entire banking system, but it could create a major source of financial instability and shift private losses onto the state and Russian taxpayers.

A similar situation is possible with the Rotenbergs’ or Timchenko’s entities. Their companies are involved in major government and infrastructure projects, so the Kremlin will most likely seek to prevent their uncontrolled bankruptcy. The most likely outcomes include debt restructuring, new government guarantees, the transfer of some assets to state-owned banks, or the de facto nationalization of troubled enterprises.

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