Bankruptcy of the agricultural holding: Causes, consequences, lessons (The case of “Eurodon”)

Abstract

The bankruptcy of large agricultural holdings has a very significant impact on production volumes, agricultural incomes, government spending on agricultural development and its effectiveness, consumer spending on food. This is illustrated with the case of the agricultural holding “Eurodon” which became bankrupt in 2019. Its bankruptcy brought down the financial results of the agricultural sector, increased the losses of agricultural organizations of the country by almost three times. The creditors’ claims on holding companies recognized by the arbitration court amounted to about 196 billion rubles taking into account the guarantees of agricultural holding organizations among themselves, without guarantees — 53 billion rubles. However, it was possible to sell the holding’s assets after bankruptcy for only 6 billion rubles. The main losses were endured by the “VEB. RF” Development Corporation. According to experts, new multi-billion loans are required to resume the holding’s operations at the volumes preceding its bankruptcy. The federal budget suffered huge losses due both to non-repayment of loans and to subsidies allocated to the holding for the period of its existence. Losses of the Rostov region are also significant: 6 thousand people lost their jobs (their salary amounted to 2.6 billion rubles a year). Also taxes to the budget, contributions to extrabudgetary funds, etc. ceased. Turkey prices on average increased by 14% in the country. The analysis of the bankruptcy case of “Eurodon” allowed to identify the risks of holdingization and develop a set of measures to reduce them.