Judge Stephen Tomlinson of the London High Court rejected eight offshore companies’ appeal of a ruling that stated they were involved in the allegedly fraudulent loan schemes of Mukhtar Ablyazov, the former chairman of Kazakhstan’s BTA Bank. Not only did the companies fail to prove they were not tied to Ablyazov’s alleged money laundering, Judge Tomlinson said, but they also “seriously misled” the court.

 
BTA Bank contends that Ablyazov used offshore companies that he secretly controlled, fake loans, and backdated documents to embezzle $5 billion, during his tenure as the bank's chairman. The bank maintains that between 2007 and 2008, under Ablyazov, it lent the eight companies in question over $1 billion for the purchase of oil and gas equipment, and it is suing the companies as part of its effort to recover the embezzled funds. BTA has nine cases against its former head pending in British court. 
 
The ruling on this appeal paves the way for the UK court to find in favor of BTA in June, giving the bank and its creditors access to the $1 billion the offshore companies are accused of having helped embezzle. Under the terms of the restructuring deal BTA reached with its creditors in 2010, any recovered assets will be split evenly, with 50 percent going to the creditors and 50 percent to the bank. 
 
The recovery of assets could not come soon enough for the embattled BTA Bank. It defaulted for a second time in January, when it missed a coupon payment of $150 million, and proposed a second restructuring to avoid bankruptcy. It warned that it could face a capital shortfall of over $ 5.1 billion by the end of 2012. BTA blamed “a high cost of funding, fierce competition among Kazakhstan banks for attractive clients, and lower than expected recoveries and revival of [its] non-performing loan portfolio” for its poor performance in 2011. 
 
Unspecified BTA creditors who had agreed to write down more than $7 billion as part of the 2010 restructuring deal were angered by the proposal for a second round of restructuring. They wrote that they had expected Samruk-Kazyna, the sovereign wealth fund that owns over 81 percent of BTA Bank, to give continued support to the bank and believed they were misled about the bank's finances during the previous restructuring process. The list of BTA’s creditors includes RBS, Credit Suisse, HSBC, and Commerzbank.
 
On May 8, the Specialized Financial Court in Almaty approved BTA Bank's application for the second restructuring under Kazakh law and gave the bank legal protection for the process. Samruk-Kazyna said that it was considering selling off its stake in the bank after the new restructuring is complete. However, the sovereign wealth fund may have difficulty finding a buyer. As of May, BTA Bank's credit ratings were poor. Moody's rated it at Caa2, meaning “of poor standing and . . . subject to very high credit risk” and Fitch rated the bank at RD or “Restricted Default.”