EQUITY lawyers successfully defended the client's interests in the Grand Chamber of the Supreme Court in the bankruptcy case of AzovElectroStal PJSC!

The case of PJSC "AzovElectroStal" was referred to the Grand Chamber of the Supreme Court to resolve the issue of interest accrual for using the loan beyond the loan term due to (a)an exceptional legal problem, (b) the presence of ambiguous court practice and (c) the existing Decision of the Constitutional Court of Ukraine on related issues.

Legal problem:

Back in 2018, the Grand Chamber formed a position on the impossibility of charging interest for the use of credit funds beyond the loan term (Resolution of the Supreme Court of 28.03.2018 in case No. 444/9519/12) and further detailed it in the Resolution of the Supreme Court of 04.02.2020 in case No. 912/1120/16.

However, the Supreme Court in its Resolution of 18.01.2022 in case No. 910/17048/17 slightly changed its position and indicated the possibility of charging interest on the use of credit funds until the day of actual repayment of the loan.

Taking into account the contradictory positions set in the resolutions of the Great Chamber of the Supreme Court, as well as the Decision of the Constitutional Court of Ukraine from 22.06.2022, in which the court also investigated the legal nature of interest on the use of credit funds, the Great Chamber of the Supreme Court accepted the case for consideration to resolve an exceptional legal issue and eliminate the existing contradictions.

Result:

Following the Grand Chamber's review, the cassation appeals of PJSC Sberbank and PJSC Ukreximbank were dismissed. The Supreme Court sided with the debtor (PJSC AzovElectroStal) and other creditors, who claimed that it was impossible to deviate from the Grand Chamber's previous conclusions and that there were no grounds for deviating from the established judicial position.

Thanks to the effective strategy of the EQUITY team, the amount of creditors' claims was reduced for a total amount of more than UAH 1 billion.

The interest and complexity of this process was also due to the fact that most of the court's procedural decisions (acceptance of the case for consideration by the court, decision to close the cassation proceedings and adoption of the court decision) were made with separate opinions of judges, which is an uncommon situation and indicates that the court does not have any uniform decisions and positions.

EQUITY team made up of an EQUITY partner Oleg Malinevskyi, counsels Dmytro Tylipskyi and Oleksiy Stepanenko, senior associate Yaroslav Labatuik, assosiate Yaroslav Malik as well as a junior associate Oleksiy Kobal have been working on the project.