Humiliation for Putin as major Russian arms manufacturer on brink of bankruptcy

A leading Russian drone manufacturer is reportedly on the brink of bankruptcy, as its financial woes take a critical turn for the worse. JSC Kronstadt is best known for producing the Orion and Inokhodets unmanned aerial vehicles (UAVS).

The drones are used for both military and civilian purposes and have been supplied to the different branches of Russia's army. The company has struggled to balance its books for the last two years, despite its government contracts. It appears the firm is unable to pay its bills, with creditors having turned to the courts to try and ensure payment.

Over the course of the past three months, 40 lawsuits have been filed against Kronstadt for a total of 626.3 million rubles (£5.8m).

The largest claims were filed by Innovative Technologies and Materials (£1.4m) and the Research Institute of Modern Telecommunication Technologies (£2m).

Nikolay Ryashin, CEO of Rusdronoport, fears the company could soon go bankrupt.

"Subcontractors who provided services or delivered products but did not receive payment learned about this," he said. "Therefore, they are filing lawsuits en masse to be included in the register of creditors."

Kronstadt's financial problems were triggered by the departure of one of its main investors - AFK Sistema - in 2022.

AFK Sistema was an important strategic investor and the main source of the drone maker's finance.

"This has sharply worsened access to investment and increased the debt burden," a source told Cnews. "Without such a 'wallet,' the company is left alone to deal with cash flow gaps."

Western sanctions and rising costs for components have also added to the company's financial problems.