U.K. court rules to set aside freezing of Kolomoisky assets

The High Court in London published on Dec. 4 its
ruling on the claims of Privatbank (PRBANK) against its former owners, Igor
Kolomoisky and Gennadiy Bogolyubov, which the defendants have interpreted as
their victory. The court ruled it has no jurisdiction to hear this case, as well
as ruled to “set aside” the worldwide freezing order of defenders’ assets. On
top of that, the court concluded that “a realistically arguable claim” of
Privatbank is USD 515 mln, not USD 1,911 mln as claimed by the bank (the
defendants recognize a USD 248 mln loss caused to the bank). Also, Privatbank
was ordered to pay the defendants full legal costs of about GBP 7.5 mln,
Kolomoisky’s lawyers reported. They also highlighted the court’s findings about
“serious non-disclosure and misrepresentation” in Privatbank’s
claims.

In their view of the ruling, Privatbank stressed in a
Dec. 4 statement that the court has allowed it to appeal the decision, also
insisting that the worldwide freezing order remains in place. The bank cited
the court’s finding that “there is no difficulty with the Bank’s proving a good
arguable case of a fraudulent scheme” and that the artificial complexity of
transactions with the bank ”is itself indicative of a fraudulent scheme”. “In
reality, the judge decided that the bank has well-grounded claims for damages
exceeding half a billion dollars”, Privatbank commented, adding that it remains
sure that it will be able to bring all its claims for judgement in a London
court.

Recall, Privatbank was recognized insolvent and was
nationalized in December 2016. The government spent UAH 155.3 bln for the
bank’s bailout, as well as forced some of the bank’s creditors, including
Eurobond holders, to contribute to its equity UAH 29.4 bln via bail-in.

Alexander Paraschiy: From our view, this ruling is more in favor of Kolomoisky, regardless
the lack of clarity surrounding the freezing order. Despite the court’s
expectations of Privatbank’s new owners “having no difficulty” in proving the
existence of fraudulent schemes under the bank’s prior owners, the bank’s
lawyers have yet to do so in a court of law. That means the case of Privatbank
against Kolomoisky and Co. will drag on for years, and may indicate a lack of
competence of the bank’s new management and counsel to prove the allegedly
apparent wrongdoings of the former shareholders. This lack of competence would
be advantageous for the bank’s bailed-in bondholders, which have an ongoing
claim against the bank in a U.K. court.