Panel:“ Sanctions, Geopolitics, and Insolvency: Managing Distressed Assets in a Fragmented World”
Summary by Rikita Karakawa – NextGen Class XV
The panel was moderated by Federica Pietrogrande and featured Steven T. Kargman( USA), Prof. Jingxia Shi( China), Frédéric Verhoeven( the Netherlands), and Ruairi Rynn( Ireland). The discussion explored the growing collision between collective insolvency law— which seeks to aggregate assets, preserve value, and distribute recoveries by legal priority— and sanctions law, which operates through exclusion, asset freezes, trade bans, and regulatory prohibitions. As a result, the modern distressed estate is no longer merely a pool of assets, but a " pool of permissions " where progress depends entirely on regulatory approvals.
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Prof. Shi established three core concepts defining this shift: fragmentation( dividing unified estates into sanctioned and non-sanctioned silos), a public-law overlay( subordinating private-law priorities to foreign policy and national security objectives), and a challenge to universalism( replacing cross-border cooperation with territorial divergence). Under this framework, traditional pari passu principles survive in theory but are heavily constrained in practice by licensing requirements and blocked payment channels.
The panel examined cases where sanctions served as the direct trigger for operational or financial collapse. Ruairi Rynn highlighted GTLK Europe, an Irish leasing subsidiary whose operations halted due to EU, UK, and US asset freezes and trade bans following sanctions on
its Russian parent, as grounded and unmaintained aircraft rapidly lost value, driving initial cash-flow distress into a multi-billion-dollar balance sheet insolvency. Frédéric Verhoeven presented Amsterdam Trade Bank( ATB), where US sanctions against its parent caused service-provider withdrawal and operational paralysis, forcing the solvent bank into liquidation. At the sovereign level, Steven T. Kargman illustrated how US sanctions against Venezuela and state oil company PDVSA created an architecture of default by blocking debt trading, prohibiting essential inputs, and freezing its crown jewel asset, Citgo.
Turning to governance and asset sales, the speakers discussed how formal insolvency processes can unstick sanctioned structures. In GTLK, the Irish High Court ruled that the liquidators ' appointment severed the Russian parent ' s control, lifting the EU asset freeze and restoring operational capability for creditors. Conversely, Frédéric Verhoeven explained how sanctioned equity holders in Fortenova and Heesen Yachts were disenfranchised from voting, causing severe market hesitation and litigation during asset sales. Similarly, Steven T. Kargman noted that even after court-supervised auctions for Citgo, final transfer remains subject to OFAC approval.
The panel concluded with a lightning round emphasizing that " policy is in command " in geopolitically impacted restructurings. Insolvency practitioners must adapt to becoming " permission managers " who use formal insolvency tools not only to navigate regulatory paralysis, but also to preserve and recover value in an increasingly fragmented global economy.
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