Sanctioned Russian bank gets new U.S. lawyers in downed airliner case

(Reuters) - Sanctioned Russian lender Sberbank has turned to a lawyer known for representing distressed debt investors and enforcing international judgments to defend it in U.S. court after its former attorneys bowed out.

Jay Auslander and other attorneys with the 31-lawyer Manhattan firm of Wilk Auslander on Wednesday filed appearances to represent Sberbank in a Manhattan federal lawsuit brought by family members of Quinn Schansman, an American killed when a Malaysia Airlines flight was shot down over eastern Ukraine in 2014.

The lawsuit claims Sberbank is among several financial institutions that facilitated money transfers to groups alleged to have downed the plane. The bank has denied the claims.

Global law firms Debevoise & Plimpton and White & Case previously represented Sberbank in the case, but said they would withdraw after Russia's invasion of Ukraine. Sberbank and co-defendant VTB Bank, another state-controlled Russian lender, were among the first entities to face U.S. sanctions over the war.

Sberbank is currently in default in the case after it failed to secure new lawyers by a court-set deadline. A Russian lawyer for the state-controlled bank had told the court that delays in hiring new attorneys were due to U.S. sanctions.

Auslander on Wednesday declined to comment on the issues involved in entering the case. He said a motion will soon be filed to revoke the default status.

He said while the firm was aware defending Sberbank carried some public relations risk, the case "long predates" the current Ukraine conflict and resulting sanctions.

Auslander said efforts by Sberbank's prior attorneys put the new legal team in a strong position to take over the case. Attorneys for defendants are currently providing records and litigating over what documents should be handed over to the plaintiffs' counsel.

Auslander's prior work includes representing Argentinian creditors in a case against that country over defaulted bonds, and has been quoted by outlets including Reuters on a potential Russia default. His other clients have included banks, investment funds and foreign companies.

New lawyers for VTB are still struggling to enter the litigation after attorneys with Latham & Watkins said they would no longer represent the Russian bank.

Brafman & Associates, another Manhattan law firm, has agreed to represent VTB but said in court filings that it was struggling to find a bank willing to process a payment from Russia and will not officially enter the case until it can.

The U.S. Treasury Department permits lawyers to be paid for defending sanctioned entities in U.S. court.

Read more:

Russian bank VTB says sanctions stalling effort to hire U.S. lawyers

Russian bank faces U.S. court default if it can't find new law firm

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