U.K. court declines to hear Privatbank claim against former owners, bank appeals

The High Court in London ruled on Nov. 23 that it does
not have jurisdiction over the claims of Privatbank (PRBANK) against its former
shareholders, the bank’s press release stated the same day. The bank was
granted permission to appeal this decision and it “is confident that it will
ultimately succeed in bringing its claims to trial in London,” Privatbank
added. On top of that, the court rejected canceling a worldwide freeing order
of the assets of two former owners of the bank, Igor Kolomoisky and Gennady
Bogolyubov, that was imposed in December 2017.

The judge found “that the Bank has been the victim of
a massive fraud – between USD 329 million and USD 1.2 billion,” Privatbank
reported. At the same time, “the decision itself does not consider definitively
whether the businessmen [Kolomoisky and Bogoliubov] had actually been involved
in the fraud,” according to a comment of Reorg Research, a distressed debt
information provider. “The judge’s comments suggested it was highly likely that
a fraud had taken place,” Reorg Research wrote.

Recall, Privatbank was declared insolvent in December
2016 and was nationalized soon after that. As part of its bailout, the
Ukrainian government contributed UAH 155.3 bln into the bank’s equity, as well
as ruled to bail-in UAH 29.4 bln of the bank’s obligations. In December 2017, the bank initiated a lawsuit in London
against its former shareholders, accusing them of fraud that brought severe
damages to the bank.

Alexander Paraschiy: The ruling
changes nothing for the bank and its former owners, as the freezing order is
still in place and there is still a good chance for the bank to appeal and
force the London court to hear the case. As we wrote before, this hearing is
unlikely to have any effect on the progress of another case in a U.K. court, in
which the holders of Privatbank’s bailed-in Eurobonds having matured in 2018
are suing against the bail-in.