Finance Minister Aleksey Kudrin says strategic companies could be allowed to go bankrupt. Some experts see nationalisation as preferable for the heavily indebted while others see bankruptcy as better.

A number of key Russian companies which borrowed heavily abroad face problems with refinancing their foreign debts. They will have to work with domestic lenders to refinance their foreign debts – that’s the message from the government.

But many companies which before the crisis had relied excessively on external funding have found themselves on the brink of bankruptcy, according to Professor Konstantin sonin of the New Economic School.

“They have enormous problems, and there’s no chance that Rusal for example, or Evraz Holding, they could refinance these debts. Basically, because these debts are too large. They borrowed a lot during the times of cheap credits, when they borrowed abroad, and also the Russian banks have borrowed abroad a lot, and now this whole source has dried up, so there’s no source, but the Russian government to help these companies.”

However the President has made clear – there will be no easy bailouts for corporations. Sberbank agreed to restructure the debt of automaker Gaz only after the group submitted its reorganization programme – including cost cutting. But in some cases there will be a hard choice – bankruptcy or nationalization. And the Finance Minister Aleksey Kudrin doesn't exclude the tough option – even for companies the Government considers strategic.

“Bankruptcies are possible among strategic enterprises.”

But Dmitry Dmitriev, Deputy Head of Research at VTB Capital says the government should support backbone firms – and that bankruptcy would harm, not help.

“Bankruptcy is not a good solution for all parties involved – neither for the company, nor for the bank, nor for the Russian government which will have to deal with a lot of employees which would lose their jobs. In my view the decision should be taken on a case by case basis.”

It means that in some cases nationalization will be hard to avoid. The question is will the companies return to the private sector?

Experts say, Russia has a bitter memory of previous large-scale privatisations in the 1990s, when companies were sold too cheaply. Any future asset sales should be carried out according to market rules.