The EQUITY team defended the interests of the financial company in a dispute over the rights to part of the premises of the fitness club Sofiyskiy

The Supreme Court has closed a chapter in the dispute over a part of the Sofiyskiy fitness club the rights to which belong to EQUITY’s client

On October 28, 2020 the Supreme Court upheld the decision of lower instances on granting the claims of the client financial company. The subject of the case was the rights under the credit and mortage agreements made by Omega Bank JSC. The premises of the Sofiyskiy fintess club served as the surity for performance under the credit agreement. The said assets were acquired by Finance Company LLC at the public auction held to sell assets of insolvent banks.

The case was complicated as during the time when the property was in hands of illegal acquirers the premises were divided, combined, allienated, and subsequently mortgaged, which created additional obsticles for defending the rights of the proper creditor.

The court decisions in favour of the client recognised the rights of the latter as both the creditor and mortgagee, cancelled a number of juristic acts and registration actions made by illegal mortagees and acquirers of the collateral.

Thus, the client’s rights as the creditor were restored, which enabled the recovery of multimillion debt under the credit agreement.

Apart from succeeding in the case, EQUITY lawyers managed to have a number of principles, crucial in court disputes over problem assets, enshrined in the court practice:

• The right against the debtor is a special subject of sales agreements and by its legal essence differs from goods and proprietary rights.
• A vindication claim (a claim to recover debt) may not be applied to the subject such as the rights against the debtor under a credit agreement or mortgage. However, the recognition of the right against the debtor is an effective remedy in such case.
• Starting from January 16, 2020, in challenging the registration actions it is claims to cancel the decisions of a state registrar that are adequate remedies rather than entries thereto. The Supreme Court reminded that cancelling legal grounds for acquiring the proprietary right to real property deprives the entry on the state registration of such right of its independent legal sense.
• Legally meaningful actions made as the result of void agreements may not be recognised by law enforcement merely because they had been made before the court confirmed the voidness of such agreements.
• Making a number of ungrounded registration actions in regard to the real estate upon acquiring the property, with the dispute being still in progress, is not in line with good faith of the acquirer.
• A person that is not a party to the juristic act, but is interested in the property being in possession of a certain person, may have the right to contest such juristic act as it may affect the exercise of his/her rights in the future. The Supreme Court Ruling contains detailed analyses of the present and adjacent court practices concering the abovementioned issues.

To find out more about the Ruling, please follow the link.

EQUITY team under the supervision of partner Serhiy Chuev, with the participation of council Andriy Ivaniv, attorney-at-law Maksym Halan, associate Taras Shtokalo, continues working on the project.