• Viktor Barsuk

    Senior Partner,
    EQUITY Law Firm

  • Oleg Malinevskiy

    EQUITY Law Firm


Address: 4 Rylskyi Lane Kyiv, 01001, Ukraine

Tel./Fax: +38 044 277 2222

E-mail: info@equity.law

Web-site: equity.law

EQUITY is one of the TOP-9 leading law firms in Ukraine, which advises clients (the largest local and international companies) in the core practice areas. Established in 2002, the firm enjoys the reputation of professional legal practitioners possessing the most challenging legal experience and a deep specialization in the fields of Litigation, White-Collar Crime, Debt Restructuring (Bankruptcy), Banking and Finance, Tax Law & Tax Disputes, Corporate, and M&A.

EQUITY team consists of more than 45 lawyers, including eight partners. Many of them have been working in the company for over 12 years. EQUITY Lawyers conduct comprehensive support of client’s projects: from the moment of receiving the task to full implementation of the solutions in favor of the client. In 2019 EQUITY firmly established itself as a leading law firm in such practice areas as Litigation, White-Collar Crimes and Bankruptcy. In particular, EQUITY has become the holder of a prestigious Legal Award “Best Law Firm in Litigation” twice in 2018 and 2016, “Best Law Firm 2018 in White-Collar Crimes/Anticorruption”, “Best Law Firm 2017 in Bankruptcy and Restructuring” and “Best Law Firm 2017 in Business Protection”.

EQUITY was included in the TOP-9 leading law firms in Ukraine in 2018 according to the results of annual research TOP-50 Leading Law Firms of  Ukraine. EQUITY was recommended as one of the leading Ukrainian firms in White-Collar Crime by Legal 500 EMEA 2019 and was recognized in Litigation, White-Collar Crime and Bankruptcy by Chambers Europe 2018, Litigation and Arbitration by Best Lawyers 2018, Litigation by Who is Who Legal 2018 and in Banking and Finance by IFLR 1000 2018.



Among our clients are such leading companies as Azovmash Corp., Prizma Beta LLC, Corporate nongovernmental pension fund of National Bank of Ukraine, National Bank of Ukraine and we also  provide legal support to well-known politicians, civil servants, business representatives, and public figures: Roman Nasirov, Gennadiy Trukhanov, Oleksandr Yefremov, Natalya Ignatchenko and Oleksiy Podolsky (Gongadze case (Pukach-Podolsky))

Insolvency Disputes

Starting from  as early as 2014, the National Bank of Ukraine has taken a course on active and consistent cleansing of the Ukrainian banking market from insolvent banks, as well as banks involved in illegal money laundering and money withdrawal operations. The conduct of such work is declared to be due to the need to reduce the risks in the banking sector, which is expected to ensure proper implementation by the banking system of the main national mission.

From 2014 to 2018, the insolvency procedure was instituted in relation to 96 banks. At the same time, the peak of the “bank-fall” was in 2014 and 2015 (33 banks annually), gradually going down (2016 — 21 banks, 2017 — 8 banks, 2018 — only one bank — VTB).

Unlike the general bankruptcy procedure for legal entities, which is regulated by the Code of Ukraine On Bankruptcy Proceedings, insolvency procedures of banks are carried out by the administrative procedure determined by the laws of Ukraine On Banks and Banking and On the System of Guaranteeing Individual Deposits. The peculiarity of these procedures is a rather quick and simplified start, which is achieved essentially due to the decision of the National Bank of Ukraine on the institution of temporary administration, and in some cases — right away on the liquidation of the bank.

The absence of a court filter at the initial stage of the bankruptcy procedure gives rise to additional risks, in particular regarding the bias, excessive promptness and partiality in actions of the regulator in the adoption of the appropriate decision.

The unwillingness of the legislator to load the court with questions of initiation of bank insolvency procedures causes a reverse effect in the form of complex court battles, which begin literally a few days after adoption of the decision by the regulator, when the owners of banks lose control of the banking institution.

Access to the Court

Despite the fact that it is a shareholder of the bank who is the person whose status directly and immediately changes by the decision of the regulator on the institution of a temporary administration and/or withdrawal of the bank from the market,  the courts have long been inconsistent in their own positions on the possibility of judicial appeal of such decisions by the NBU.

One of the key legislative reasons for such inconsistency was the narrow interpretation by certain judges of the provisions of Article 79 of the Law of Ukraine “On Banks and Banking”, according to which the right to appeal in court in accordance with legal procedure the decision, actions or omissions of the National Bank of Ukraine or its officials is vested in the “bank” or “other persons covered by the supervisory acti­vity of the National Bank of Ukraine”.

In particular, the absence in the lis­ted of a bank’s shareholder, according to some judges, indicates that he has no right to appeal such decisions of the National Bank of Ukraine or puts the shareholder in dependence on the number of shares held by the shareholder.

In particular, such a conclusion was made by the Supreme Administrative Court of Ukraine in its Resolution of 9 June 2016 in case No. K / 800/4153/16. The recent practice of the Grand Chamber of the already upgraded Supreme Court took into account the discrepancies and restored the balance of justice, unequivocally confirming the power of the shareholders of the insolvent bank to sue the NBU. Thus, by its Resolution of 5 February 2019, in case No. 826/2184/17, the Grand Chamber of the Supreme Court affirmed the decision of the courts of previous instances, whereby the bank shareholders’ claim was granted in full. At the same time, in the said decision, the court noted that taking into account that the executive bodies of PJSC Zlatobank were deprived of their powers, the Grand Chamber of the Supreme Court arrived at the conclusion on the existence of exceptional circumstances, by virtue whereof the power of the controlling shareholder to apply to the court in this case in the interests of the bank, must be recognized.

Pyrrhic Victory

However, winning a case against the NBU and abolishing illegal decisions does not result in automatic and complete rehabilitation of the bank in its own rights — the restoration of a banking license, the return of documents and the elimination of other artificial barriers for banking activities. Ta­king advantage of the lack of legislative regulation and abusing its discretionary powers, the NBU is practicing the adoption of repea­ted decisions on the initiation of the temporary administration/liquidation procedure.

Thus, for the first time, the NBU made a decision to revoke the banking license and liquidate PJSC CB Soyuz on 15 March  2016. Then, on 28 March 2013, Kyiv Regional Administrative Court declared unlawful and revoked the resolution to revoke the banking license and liquidate PJSC CB Soyuz. On 26 April 2016, Kyiv Appellate Administrative Court denied complaints of the NBU and DGF. Thus, the decision of the Regional Administrative Court of Kyiv took effect. The NBU complied with the court decision. However, on 28 April  2016, the National Bank of Ukraine adopted ­another decision to revoke the banking license and to liquidate PJSC CB Soyuz.

Obviously, the reason for such a situation is the failure by the legislator to abide by the principle of judicial control, which is fundamental for the competition of creditors process.


Equally problematic in practice was the question of the status of a legal entity, which in the past was a bank, managed to defend justice in the courts, by setting aside the illegal decisions of the regulator on its insolvency and liquidation, but cannot use its own license due to the omissions by the National Bank of Ukraine regarding return of the license. This is exactly the situation that happened to one of our clients — the financial company PJSC UkrInCom, which in the past had a license and the name PJSC UkrInbank. After the setting aside of illegal decisions of the regulator regarding the institution of temporary administration and liquidation and sue for failure to get back the license, PJSC UkrInCom was forced to change the name by excluding the word “bank” from it and to obtain a license of a financial company. This was necessary, inter alia, for continuing business activities and servicing obligations to depositors.

Taking into account the lack of proper legislative regulation of the further fate of banks whose solvency was subjected to court trials and which continue carrying on business as financial companies (for example, UkrInCom), two opposing approaches have emerged in court practice. The first approach suggests that UkrInCom by the “general legal capacity” is the same entity as UkrInBank. That is, the absence of a special legal capacity cannot exclude the capacity of the entity in other legal relationships, and, therefore, UkrInCom must perform obligations to depositors under deposit agreements and, accordingly, has the right to repayment of previously extended loans. The above approach has remained dominant and fully supported by the civilest doctrine and practice of civil courts. The second approach is that UkrInCom, is not entitled to its own assets acquired at the time when it had the status of a banking institution, and, therefore, it cannot collect loans extended by UkrInBank or perform any obligations to depositors. Such an approach was initiated in the aforementioned Resolution of the Joint Chamber of the Cassation Commercial Court of the SC of Ukraine of 3 August  2018, in case No. 910/8117/17. Certain commercial courts started to mistakenly follow the approach, thereby not only violating the rights of a legal entity, the former bank, and its shareholders (who achieved the setting aside of illegal decisions of the NBU on the institution of a temporary administration and liquidation), but also ignoring the rights of depositors (creditors) of the institution, depriving them of hope recover their own savings in full.

In accordance with the Resolution of the Cassation Commercial Court of the SC of Ukraine of 23  January 2019 and the Resolution of the GCh of the SC of Ukraine of 26 February  2019 in case No. 925/698/16, that question was referred to the Grand Chamber in connection with the existence of an “exclusive legal problem” and the need to step aside from the position of the Joint Chamber, which is set out in the resolution of 3 August  2018 in case No. 910/8117/17. Thus, the Cassation Commercial Court, in fact, questioned the position of the Joint Chamber of the Cassation Commercial Court formed in the resolution of 3 August 2018, in another case No. 910/8117/17 (case UkrInCom v. PJSC Obolon), where under the change of name of the legal entity from PJSC UkrInbank to PJSC UkrInCom makes it impossible for the latter to retain the rights in the assets of PJSC UkrInbank, including rights under loan agreements.

Twist the Nuts

Draft Law No. 6608 of 21 June 2017 was introduced for consideration by the Verkhovna Rada of Ukraine. The Draft Law proposed to amend Article 77 of the Law of Ukraine On Banks and Banking  by restating some of its provisions as follows: “The National Bank of Ukraine concurrently with the adoption of the decision to revoke a banking license and liquidate the bank must enter an appropriate record of the exclusion of that bank from the State Register of Banks.” “The initiated procedure of liquidation of a bank may not be stopped/suspended, including in case of cancellation of grounds for its initiation”.

In such circumstances, it seems to be more appropriate to legislatively define the status of the bank after the setting aside of the decisions of the NBU / DGF in court; it is necessary to regulate the procedure for returning the license and the choice of legal ways of changing the status, to determine the guarantees of depositors, to differentiate and strengthen the liability of shareholders and management of the bank, as well as that of the regulator.