On 22 January, the Supreme Court dismissed the NBU’s cassation appeal against rulings by lower courts forbidding the recovery by the NBU of the mortgaged property of Hadzhybei LLC, a company related to PrivatBank’s former owner, Ihor Kolomoiskyi.
In October 2014, Hadzhybei LLC pledged two land plots in Odesa oblast as security against a refinancing loan that the NBU made to PrivatBank before it was nationalized. As a property surety provider, Hadzhybei LLC failed to deliver on the pledge, and so the NBU filed a lawsuit with the Commercial Court of Odesa Oblast, seeking to foreclose on the mortgaged property.
On 26 October 2018, the court of first instance dismissed the NBU’s lawsuit, as did the court of appeal on 22 October 2019. In substantiating their decisions, the courts said that before filing to foreclose on Hadzhybei LLC’s assets, the NBU should have attempted to have the debt debited from PrivatBank’s accounts.
It should be noted that in bringing the action against Kolomoiskyi’s company, the NBU acted in accordance with the law, specifically the Law of Ukraine On the National Bank of Ukraine. Under that law, the NBU has the right both to debit funds from indebted banks’ accounts and to foreclose on the mortgaged property of financial and property surety providers. As an issuer of refinancing loans, it is the NBU’s preferential and unconditional right to have those loans repaid when they mature.
On top of that, the Supreme Court has on multiple occasions indicated that the right to have funds debited from PrivatBank’s accounts is not an obligation of the NBU and, thus does not in any way, shape, or form override the NBU’s lawful right to foreclose on mortgaged property, including through going to court. This legal stance has been expressly declared in similar lawsuits (in Supreme Court rulings dated 3 July 2018 in Cases No. 910/15475/17 and 910/15408/17, as well as in a ruling dated 26 September 2018 in Case No. 910/16978/17).
“We don’t agree with the Supreme Court’s decision. We are convinced that it is in violation of applicable laws. This ruling poses a risk that PrivatBank’s former owners may evade the responsibility of meeting their commitments. In addition, a situation in which a court ruling restricts the lender’s right to choose any of the lawful options for having its creditor claims met creates legal uncertainty and violates the rights not only of the NBU, but also of other creditors seeking lawfully to recover what they are owed,” said Viktor Hryhorchuk, Head of the Litigation Office at the NBU Legal Department.
PrivatBank owes the NBU close to UAH 7.6 billion in debt on refinancing loans. To have PrivatBank’s debt repaid, the NBU filed 148 lawsuits in 2018 against PrivatBank’s former owner (and financial surety provider) Ihor Kolomoiskyi, and against 32 companies that were related to him and that acted as property surety providers. In those lawsuits, the courts have already made 24 rulings in favor of the NBU involving the recovery of UAH 1.36 billion in mortgaged property. Of those rulings, 18 have already taken effect, and the Public Enforcement Service has already received documents to set the enforcement procedure in motion.