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Maksym Kopeychykov: Most Often Courts Are Taking the Banks’ Side

Date of publication: 11 February 2014

Maksym Kopeychykov, Attorney at Law, Partner

Source: Liga

– Maksym, tell us about litigation practice with bank loan agreements: what are the most “popular” requirements of banks, borrowers and the results of such disputes?

– We all know the ultimate goal of the banks – they want their money back. The most popular requirement of the banks is foreclose of loan amount, interest, fines and penalties. The second most popular requirement is foreclosure on collateral/mortgage. Unfortunately, granting of claims and initiation of enforcement proceedings according to effective decisions not always result in actual recovery of money. Thus, sometimes it is more promising to impose enforced collection on some of the borrower’s assets. In such cases, it refers to imposition of enforced collection on pledged or mortgaged property. This can be done in several ways. Earlier court decisions usually provided only for the sale of pledged property at auctions. However, after the Supreme Court found that the ways to meet the requirements of pledge and mortgage holders provided in the out of court settlement agreement can be used in court, the judicial mechanism for protection of the banks’ violated rights became more efficient.

With regard to the borrowers’ requirements, they often try either to obtain invalidation of the loan agreement (to avoid the accrual of interest or change the loan currency), or try to challenge the agreement securing the loan agreement.

Most often, the borrowers either try to invalidate the loan agreement (to avoid the accrual of interest or change the loan currency), or try to challenge the agreement securing the loan agreement.

– Tell us about the high-profile cases in this regard.

– There is much to tell, because the lion’s share of the largest disputes between banks and borrowers comprise disputes where Ilyashev and Partners provided legal advice. These are primarily the cases related to Nadra Bank and BTA Bank (in the latter case – recovery of debt on loans granted when Mukhtar Ablyazov managed the bank).
In the case of Nadra Bank, I mean disputes with the companies associated with the former shareholders of the bank, who owe vast amounts of money to the bank. I will not go into details, because the majority of these processes are still pending.

We also provided legal advice in many less high-profile cases for other Ukrainian and foreign banking institutions. Among the major cases, which the lawyers of Ilyashev & Partners did not counsel or counseled only at a certain stage are the disputes between Ukrsotsbank and Puzata Khata, ISA Prime Developments Group. It is also worth mentioning disputes between banks and AIS Group of Companies and claims of different banking institutions against Hekro Pet Ltd. The ups and downs of the majority of these cases were described in detail in the media.

– Tell us about the court decisions prohibiting to sign a loan agreement without a written consent of the husband/wife and a guarantor.

– The guarantor’s consent to signing the loan agreement is not required. Guarantor usually accepts the terms of the loan agreement as a given. Another thing is that the variation of the principal agreement resulting in increase of liabilities without the guarantor’s consent causes termination of guarantee.