On 15 April, the Supreme Court partially upheld the cassation appeal of the National Bank of Ukraine (NBU) to decisions of the court of first instance and the appellate court in case No. 826/779/18. In this case, courts of previous instances cancelled NBU decision on declaring Novyi bank insolvent.
Please be reminded that, the NBU declared Novyi bank insolvent on 13 July 2017. The decision was based on the decrease in the regulatory capital below one third of the minimum amount.
The bank’s shareholder, Design Office Pivdenne n.a. M.K. Yanhel Public Enterprise, filed a complaint in January 2018 to the District Administrative Court in Kyiv city against the NBU. The plaintiff noted that the NBU had unlawfully denied the approval of the resolution plan of Novyi bank and decided to declare it insolvent.
The court of first instance and the appellate court decided in favor of the plaintiff. Having disagreed, the NBU filed a cassation appeal to the Supreme Court. In the cassation appeal, the NBU stated that the court of first instance and the appellate court had interfered with the discretionary authority of the regulator, since the decision to approve or deny approval of the plan for ceasing banking operation lies within the remit of the NBU.
The NBU also noted that courts of previous instances failed to provide a legal opinion on the shareholder’s default on liability to provide additional capital to Novyi bank in the amount required by law leading to the bank’s insolvency.
On 15 April 2020, the cassation appeal was partly upheld, that is the decisions of courts of previous instances were cancelled and the case was referred for trial to the court of first instance.
For more details on the reasons and results of the banking sector clean-up, please see Great Banking Clean-Up.