News date: 16 November 2023
On 4 October 2023, the Supreme Court within the Judicial Chamber on Bankruptcy Cases of the Commercial Cassation Court, made a final decision in favor of Hotel Salute PJSC and bankruptcy creditors in the case of the motion filed by the National Bank of Ukraine to foreclose on the hotel building by selling it at a public auction within the framework of enforcement proceedings.
Thanks to the well-coordinated work of Ilyashev & Partners Law Firm, the Court of Appeal ruled in favor of Hotel Salute PJSC and dismissed the NBU’s claim. Attorney at Law, Counsel, Insolvency Receiver, Co-Head of Insolvency and Financial Restructuring of Ilyashev & Partners Law Firm, Vadym Kizlenko, proved in the Court of Appeal that there are no grounds for foreclosure on the property.
The National Bank of Ukraine, disagreeing with the decision of the Court of Appeal, filed a cassation appeal against the Supreme Court. Due to the complexity and high-profile nature of the case, it was referred to the Judicial Chamber on Bankruptcy Cases of the Commercial Cassation Court within the Supreme Court, which upheld the resolution of the appellate instance, and dismissed the cassation appeal of the NBU.
The Supreme Court agreed with the arguments of Vadym Kizlenko and recognized that the NBU’s actions to foreclose on the mortgage by initiating separate proceedings against the debtor who is in bankruptcy proceedings cannot be considered lawful.
Moreover, the Supreme Court within the Judicial Chamber on Bankruptcy Cases of the Commercial Cassation Court, deviated from the constitutional implications set out in the resolution of the Supreme Court dated 11 June 2020 in case No. 917/1369/17 on the possibility of satisfying a claim for foreclosure on the subject of a mortgage, provided that bankruptcy proceedings have been initiated against the mortgagee. This position of the Judicial Chamber on Bankruptcy Cases of the Supreme Court is due to the fact that the claim in this case is not, in essence, obtaining consent to sell the debtor’s property in the manner specified in Art. 41 (5) of the Code of Ukraine on Bankruptcy Proceedings.
“The Resolution of the Supreme Court will become a guide for participants in such legal relations, since the court has put an end to disputes regarding the procedure for satisfying mortgagee’s claims in relations with debtors against whom bankruptcy proceedings have been initiated,” Vadym Kizlenko emphasized.
The resolution of the Court of Cassation comes into force from the moment of its adoption, is final and is not subject to appeal.
Hotel Salute is a 3-star, 7-story hotel in Kyiv. It was designed by famous architect Avraham Miletski in 1984 and built in a modernist style.