On July 27, 2021, the Commercial Court of Kyiv in case No. 910/5617/21 rejected the request of Ukrainian Railways (the “Company”) to invalidate the contract by which VR Global Partners, LP (“VRGP”) acquired debt claims against the Company. In so doing, the court confirmed the legality of the purchase and sale agreement dated February 22, 2019 by which VRGP concluded its purchase of a portfolio of loans with a principal amount of $153 million owed by Ukrainian Railways.

Despite the fact that VRGP has received six judgments from the Ukrainian Supreme Court in its favor, Ukrainian Railways has failed to settle its obligations under the loans. In its latest effort to avoid payment, the Company asserted that VRGP was not entitled to the benefit of the contract under which it purchased the loans on the basis that the transaction was an impermissible factoring agreement. This argument has now been rejected by the Kyiv Commercial Court.

"We welcome this court decision which confirms, as we have always asserted, that VRGP's acquisition of this debt, which took place in an open, transparent auction sanctioned by the National Bank of Ukraine, was lawful. Attempts by Ukrainian Railways to characterize it otherwise have been nothing other than a spurious attempt by the company to avoid its legal obligations to repay borrowed money," commented Richard Deitz, President of VR Capital.

"This decision comes on top of 6 Supreme Court decisions and an even greater number of lower court decisions upholding VRGP's right to recover debts from Ukrainian Railways. We call on Ukrainian Railways and its shareholder, the Ukrainian government, to uphold their legal obligations and put an end to this matter. With President Zelensky's upcoming visit to Washington, it is an opportune moment to send a signal to its partners that Ukraine is committed to upholding the rule of law," added Mr. Deitz.

As previously reported, on April 20, 2021, the Supreme Court announced its decisions in four cases on the recovery of the debt from Ukrainian Railways in favor of VR Global Partners, L.P. On July 8, 2021, the Supreme Court ruled in a fifth case, and on July 15, 2021, in a sixth one. In all cases, the Supreme Court upheld the position of the lower courts and denied in full Ukrainian Railways’ cassation appeals.

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 began operations in May 1999.

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.

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