Bakhmatyuk house, deposits arrested at demand of Ukraine central bank

The National Bank of Ukraine (NBU) reported on Oct. 31 it managed to force the State Executive Service (SES) to arrest some property belonging to Oleg Bakhmatyuk, the owner of Ukraine’s leading farming company Ukrlandfarming (UKRLAN, AVINPU). According to the NBU press release, the Service arrested on Oct. 28 UAH 1.2 bln of Bakhmatyuk’s deposits in his failed banks, VAB Bank and Finansova Initisiatyva, as well as his 1,049 sq m house in Kyiv’s suburbs.

The NBU acknowledged it took many months to secure the arrest. A local court ruled to arrest Bakhmatyuk’s deposits and house on Sept. 25, after which the SES refused to enforce the ruling, citing formalities. (It pointed out the ruling did not contain some personal info on Bakhmatyuk). In turn, the NBU had to appeal the SES’s refusal and got a favorable ruling in October.

Alexander Paraschiy: Of the listed arrested assets, only a house in a luxury suburb of Kyiv has real value. The deposits of a total amount of UAH 1.22 bln have zero value, as the banks keeping them have been declared insolvent and all their deposits have been transferred to the State Deposit Guarantee Fund. Bakhmatyuk, an insider in the banks, is last in line to get back his deposits.

The arrest has two implications for the creditors of Ukrlandfarming and Avangardco. First, it’s positive that none of the assets of these companies have been arrested so far, though the risk remains. Secondly, this is a good illustration of how hard it is for a creditor to fight with Bakhmatyuk, even if a creditor is as powerful as the central bank and its claims are clear and legitimate.