Ukraine appeals court rejects attempt to arrest Bakhmatyuk assets

The Kyiv Appellate Court ruled on Sept. 27 to reject an appeal filed by the National Bank of Ukraine (NBU) to arrest all the property that belongs to businessman Oleg Bakhmatyuk, Concorde Capital has learned from a court decisions registry. The NBU appealed a local court decision that first decided to arrest Bakhmatyuk’s property on May 12 but then cancelled its own decision on May 26. The assets that faced arrest on May 12 consisted of property and/or corporate rights in 72 companies whose “ultimate beneficiary owner” is Bakhmatyuk. Of them, 62 companies were reported as subsidiaries of Bakhmatyuk’s farming and food holding Ukrlandfarming (ULF, UKRLAN) in its 2015 annual report.

The appellate court based its rejection of the NBU appeal on its view that the fact that Bakhmatyuk is an “ultimate beneficiary owner” doesn’t mean he owns any shares or stakes in any of its 72 companies.

Recall, the court battle was initiated by the NBU to reclaim about UAH 4 bln in refinancing loans provided by the NBU to Bakhmatyuk’s bank Finansova Initsiatyva, which failed in May 2015. The NBU alleged Bakhmatyuk had provided a personal financial guarantee under the loan.

Alexander Paraschiy: The NBU’s inability to prove that Bakhmatyuk owns corporate rights in ULF-related companies is a worrying signal for the creditors of Ukrlandfarming and Avangardco (AVINPU). If a state institution cannot reclaim its debts in Ukrainian courts, the chances for other creditors are even worse. Alternatively, this could be an indication of the NBU’s poor capacity (or even lack of true intentions) to successfully sue its failed borrowers.

In any case, all this confirms our idea that Bakhmatyuk and Co. are well-prepared to protect their assets from any creditor, which we described in our Aug. 11 report on Ukrlandfarming and Avangardco. We retain our negative view on UKRLAN and AVINPU Eurobonds and suggest the bondholders to get ready for tough and risky talks.