14:46 11.10.2021

VR Global Partners Files Cassation Appeal against Court of Appeal Decision on Invalidity of the Right of Claim against Ukrzaliznytsya

2 min read

NEW YORK, October 11, 2021: On October 7, 2021, VR Global Partners, L.P. ("VRGP"), filed a cassation appeal against the recent ruling of the Northern Commercial Court of Appeal by which the court of appeal overturned a prior verdict of the Kyiv Commercial Court upholding the validity of a 2019 contract of assignment under which VRGP acquired certain NPL claims against Ukrzaliznytsia from PSC Prominvestbank.

In its cassation appeal, VRGP defends its right to acquire distressed commercial loans under clear provisions of the Ukrainian Civil Code as well as prevailing precedent of the Grand Chamber of the Supreme Court. VRGP refutes the artificial constructs used in the court of appeal ruling, including an illogical and unfounded opinion that loan sales can be carried out by insolvent banks, but not by functioning banks.

VRGP also addresses the public policy issues that would be impacted by allowing the unfounded ruling of the appellate court to stand. Such a ruling would strip solvent banks of critical means to manage their credit risks, leading to reduced recovery rates for Ukrainian banks on NPLs, greater systemic stress and a generalized undermining of the capital strength and resilience of the banking system.

The appellate court interpretation would also put Ukraine at odds with norms of banking systems throughout Europe, Asia and the Americas as well as policy prescriptions of such institutions as the ECB, the IMF and the Bank for International Settlements who have all supported a robust secondary market in NPLs, including the active participation of investment funds, as a crucial element in the toolkit for managing problem assets in banking systems.

In light of the exceptional importance of these cases, VRGP has requested that the case be referred to the Grand Chamber of the Supreme Court.

VR Global Partners, L.P. ("VRGP"), is an investment fund with approximately $5 billion of net investor assets. VRGP is one of Ukraine’s leading western investors, with a track record of investment in the country dating back to 1999. VRGP is 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 authorized by the UK Financial Conduct Authority. The firm operates via its principal offices in New York and London and serves a client base of leading western institutional investors.

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