PrivatBank wins $1.91 bln claim against former owners, interest pending final ruling
The former owners of the nationalized PrivatBank (Kyiv), Ihor Kolomoisky and Hennadiy Boholiubov, are jointly and severally liable to the bank for damages caused to it; this amount should be determined at $1 billion 911.88 million less the real value of the transferred assets, as specified in the text of the decision, the court’s decision published on Wednesday said.
“During the oral arguments, I did not hear any statements regarding interest, although the Bank provided written arguments regarding its claim for the recovery of both compound and simple interest if it is satisfied. In light of my conclusion, any dispute regarding interest should be resolved at the next hearing to be held after this decision is rendered,” Judge William Trower noted.
As for the six corporate defendants, according to the decision, the judge does not consider them liable for the full amount of the claimed losses. In his opinion, it is necessary to take into account the characteristics of the relevant 270 write-offs and unpaid advance payments. Therefore, the decision states: if the parties cannot agree on the scope of such liability, this issue may also be returned for determination at the next hearing.
The decision itself states that it concerns 336 transferred assets. Kolomoisky claimed that UAH 1.296 billion and $538 million were repaid through their transfer in the period from March to September 2016, as a result of which the outstanding amounts were also reduced by UAH 1.276 billion and $123 million within the same process. At the same time, PrivatBank emphasizes the need to take into account the fair value of these assets.
As reported, PrivatBank, nationalized in December 2016, filed a lawsuit in the High Court of London against the former owners of Kolomoisky and Boholiubov, as well as six British companies allegedly related to them - Teamtrend Limited, Trade Point Agro Limited, Collyer Limited, Rossyn Investing Corp, Milbert Ventures Inc and Zao Ukrtransitservice Ltd. - and obtained a court order for the worldwide seizure of their assets worth more than $2.5 billion.
In turn, the defense of Kolomoisky and Bogolyubov rejected the accusations and argued that the bank failed to identify specific actions of the former owners that were illegal under Ukrainian law or that directly led to losses for the bank.
The final hearings in the High Court of London began in mid-June 2023, including because the judge postponed them due to the war in Ukraine. The bank said that by now the size of the claim has increased from the original $1.9 billion to almost $4.5 billion, as interest is accrued at approximately $500,000 per day, and the court order on the worldwide seizure of the defendants' assets remains in effect.
After the court's decision was announced, PrivatBank declared an undisputed victory. "In a judgment issued today, the High Court in London found that the two individuals misappropriated almost $2 billion of the bank's funds through a "highly sophisticated refinancing scheme that operated in the interests of the individual defendants," the release said.
PrivatBank recalls that at the time of nationalization it was undercapitalized by about $5.5 billion and was subsequently recapitalized by the state.
According to the bank, the full amount of the former owners' obligation to the bank has yet to be determined, but given that the court satisfied the claims in full, they are likely to be required to pay more than $1.7 billion, even without taking into account interest over a period of more than ten years.
"The full amount to be paid to the bank, including interest and legal costs, will be determined at the next hearing later this year and is likely to be significantly in excess of $2 billion in total," the release said.
PrivatBank is the largest state-owned bank in Ukraine. Today, the bank serves over 18 million active clients, and in general, 70% of Ukrainians use its services. The bank is a leader in the retail segment and actively introduces services for small and medium-sized businesses, has an extensive network of 1,186 branches, 6,850 ATMs, almost 10,400 self-service terminals and over 308,000 POS terminals throughout the country. The PrivatBank team has over 19,000 employees.