According to Russian media, AO Kronstadt (Kronshtadt Group), one of Russia’s largest drone manufacturers, is on the verge of bankruptcy after months of financial turmoil and a growing number of lawsuits. In recent months, the company has faced dozens of debt claims, seeking more than 600 million rubles (about $7 million) since early summer. The largest cases involve 151.1 million rubles from LLC Innovative Technologies and Materials and 220.6 million rubles from AO Modern Telecommunication Technologies Institute.
The company is known for supplying drones widely used in Russia’s war against Ukraine, and its manufacturing plants have been targeted by Ukrainian forces. A combination of sanctions, battlefield strikes, and debt obligations has put the enterprise in its most unstable position since its founding.
By May, total claims against the company had reached 1 billion rubles, highlighting the growing financial pressure faced by the manufacturer of the “Orion” and “Inokhodets” drones—systems often compared to the U.S. MQ-9 Reaper.
Industry sources revealed that the company has been in financial distress for two years, tracing back to 2022 when its main shareholder, AFK Sistema, exited. Without financial backing, debt levels rose rapidly.
(The export version of the “Orion” drone is known as “Orion-E”)
Sanctions imposed by the United States and the European Union further pressured the company, cutting off access to critical foreign-made components and driving up costs. Meanwhile, large state contracts imposed heavy production demands on AO Kronstadt at a time when its supply chain was already strained.
This case symbolizes the broader challenges faced by Russia’s defense industrial base under wartime pressure. The Kremlin relies heavily on unmanned systems to sustain its operations in Ukraine, and AO Kronstadt is at the core of this strategy. Its “Orion” and “Inokhodets” drones provide long-endurance surveillance and strike capabilities, offering Russia a domestic alternative to Western armed UAVs.
Despite significant government funding, the challenges appear insurmountable. Sanctions have cut off critical technological inputs, subcontractors have filed claims in court, and financial liabilities have reached unsustainable levels. Whether the company can be restructured or merged into another defense group remains uncertain, but for now, Kronstadt is on what many industry insiders call an inevitable path to bankruptcy.
