Ferrexpo wins appeal to claim higher losses from insolvent bank, media report

Ferrexpo Poltava Mining (FPM), a subsidiary of
Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO LN, FXPOLN), won its
case in the Kyiv Appellate Economic Court to boost its claim against Finance
& Credit bank to UAH 3.9 bln (USD 146 mln), according to oligarh.media, a
news site. The court’s decision, which was made on July 18, is not yet
available in Ukraine’s registry of court decisions.

Recall in October 2017, FPM lost the first-instance court hearing
in which it wanted to boost its claim against Finance & Credit bank, which was declared insolvent in September 2015
to UAH 3.9 bln (USD 146 mln) from UAH 485 mln (USD 18.1 mln).

Dmytro Khoroshun: The
prospects of Ferrexpo actually recovering money continue to be very thin even
after this decision, for several reasons. First, Ukraine’s Deposit Guarantee
Fund might continue the court battle. Second, as a party related to Finance
& Credit bank, FPM’s claims are of very low priority in the bank’s creditor
registry. And the quality of the bank’s assets (a significant portion of which
are claims against companies related to Ferrexpo’s majority owner, Kostyantyn
Zhevago) is likely far from sufficient to satisfy creditors of such low
priority.

We think that the only real possibility of Ferrexpo
recovering any of its funds from Finance & Credit bank is a comprehensive
restructuring of the claims of the bank’s creditors, including Ferrexpo,
against the bank. Such a restructuring will need cooperation from the bank’s
debtors, most importantly Zhevago’s business interests other than Ferrexpo.
However, there have been no similar precedents in Ukraine, in large part
because few owners of the banks that went insolvent are open to the idea.