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U.K. court to hear USD 1.9 bln Privatbank claim against former shareholders

U.K. court to hear USD 1.9 bln Privatbank claim against former shareholders

16 October 2019

In a major victory for the Ukrainian government, the
Court of Appeal in London ruled on Oct. 15 that it is within the jurisdiction
of the High Court in London to hear the claim of Privatbank (PRBANK), now
state-owned, against its former shareholders, the bank reported that day. The
ruling overturns a first-tier court decision reached in December 2018
that the case was not within the court’s jurisdiction.

 

Privatbank had originally claimed USD 1.9 bln from
former shareholders Ihor Kolomoisky and Gennadiy Bogolyubov, who are alleged to
have fraudulently misappropriated the funds. The claim now amounts to about USD
3.0 bln, including interest, Privatbank reported. Following the latest ruling,
a court order on the worldwide freeze on the assets of the bank’s former
shareholders remains in place.

 

Recall, Privatbank was recognized insolvent and
nationalized in December 2016. Its capital gap was filled with a UAH 29 bln
conversion of liabilities into equity (bail in) and a UAH 155 bln equity
injection by the government in 2016-2017.

 

Alexander Paraschiy: This
victory enables the Ukrainian government to continue to claim massive
compensation from Kolomoisky & Co. in a court whose ruling will be
respected by all the sides of the trial. After the recent ruling, the
government’s position in the claim looks strong and an award of a compensation
seems only a matter of time. This interim victory also significantly improves
the government’s leverage in possible talks with Kolomoisky on a “compromise”
that will satisfy the position of the state and Ukraine’s Western financial
partners.

 

Ironically, the state bank’s success in the
international court only increases its risks within Ukraine. As the potential
damage to Kolomoisky’s wealth has grown more ominous, the billionaire now has
much more incentive to try to retake control of the bank based on the decisions
of local courts. The first ruling on Kolomoisky’s claim against the bank’s
nationalization may be announced by the Kyiv Economic Court as soon as
tomorrow
.

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