Kyiv, June 11, 2021. VR Capital considers illegal and will appeal the decision of the Kyiv District Administrative Court (KDAC) of June 4 on lifting the arrest from Ukrzaliznytsia’s (UZ) funds and banning banks from blocking any banking operations and seizing UZ funds.

The decision of the KDAC is unprecedented for the banking sector of Ukraine, as it effectively prohibits banks from conducting banking operations. The KDAC had neither legal grounds nor the authority to consider this case and make such a decision in relation to the state executor, and even more so in relation to the banks.

VR Capital believes that the unprecedented and absurd dispute initiated by UZ in the framework of administrative proceedings is a continuation of UZ’s attempts to delay resolving the issue of debt to VRGP and avoid liability for its contractual obligations. UZ is trying in any way to lift the arrest imposed by the state executor in accordance with the law.

In adopting such a decision, the KDAC exceeded its authority and, on its own initiative, interpreted the previously imposed injunction against the recovery of UZ’s funds as one that also included a prohibition for the state executor to impose the seizure. At the same time, the court did not justify the ban for banks to carry out banking operations at all.

As previously reported, the seizure of UZ’s funds was imposed as part of the execution of court decisions on debt collection from UZ in favor of the American investment fund VR Global Partners (VRGP). UZ’s debt to VRGP was confirmed by Supreme Court decisions in April this year. As part of the enforcement proceedings, the state executor imposed the seizure of UZ’s accounts in banking institutions.

VR Global Partners notes that blocking the execution of court decisions by the KDAC may be grounds for recourse to the ECHR and obtaining compensation by VRGP from the state of Ukraine for damages.

VR Global Partners, L.P. (“VRGP”), is an investment fund managed by VR Advisory Services Ltd (“VRASL”). VRASL is registered as an investment adviser with the U.S. Securities and Exchange Commission and VR Advisory Services (UK) LLP, a sub-investment adviser for VRGP and certain other funds, is authorised by the UK Financial Conduct Authority.  VRGP launched in May, 1999 and has been the recipient of over 15 industry awards in New York and London for its performance over the years, including, most recently, EuroHedge’s 2020 award for Long Term Performance (20 Years) among global macro, fixed income and relative value funds.

VR Capital is an international asset management firm serving an institutional investor client base with approximately $5 billion in investor assets under management via pooled fund structures.  VR Capital is one of the largest western investors in Ukraine with a portfolio of holdings in excess of $1 billion.  With a proven track record of over 22 years, VR Capital focuses on investments in emerging and developed markets.  The firm operates via its principal offices in New York and London, and over 98% of its assets under management stem from investor relationships in the United States and Western Europe.

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