SVP Won A Virtually Hopeless Case To Return A Bankrupt Company With Valuable Assets In Kharkiv

Selepei, Volkovetsky & Partners has successfully completed a complex long-term project to restore the ownership of a bankrupt real estate company in Kharkiv. The client could not return his assets for 10 years.

On February 15, 2022, SVP lawyers won a key lawsuit in the Supreme Court in this project, and in May the full text of the relevant decision of the Supreme Court appeared.

In this case, the lawyers of our firm, partner Andriy Selepei, advisor Nazar Bilotserkovets and lawyer Elizaveta Savenko provided legal assistance to the bankrupt company, whose valuable asset, namely warehouses in Kharkiv, was illegally removed by its founders in 2012 instead of account of this property to repay the claims of creditor banks. In February of this year, we managed to extort this property from someone else’s illegal possession and finally return it to the ownership of the bankrupt company. Now this property can be sold at auction to legally repay creditors’ claims.

SVP lawyers started the procedure of returning this asset in 2014. The courts then dismissed our first property claim, allegedly because the property had changed as a result of redevelopment and reconstruction, and therefore the rightful owner, who is our client, can no longer claim the asset back. This position was agreed to in 2016 by the Court of Cassation – then the Supreme Economic Court of Ukraine.

However, the lawyers of Selepei, Volkovetsky and Partners continued to work to protect the property rights of our client and filed a new lawsuit – against another illegal purchaser of property, who acquired this asset as a result of resale in 2018. Despite the fact that the case was practically hopeless, SVP managed to convince the judges of the new Supreme Court of the erroneous position of the judges of the Supreme Economic Court of Ukraine on the same issue and in fact the same dispute. This was the first case in Ukraine to be heard by the Supreme Court, in which the owner tried for the second time to claim the same object from a new acquirer after the courts refused to claim the same object from the previous illegal acquirer.

We have shown that, although we have already been denied the claim, this denial in itself did not mean that our client was no longer the owner and could not claim the asset. After all, the full text of the court decision, at first glance, negative for us, actually indicated that the property was taken out of the possession of our client illegally. Accordingly, the person who bought the property after the completion of the first case, if acted prudently and in good faith, had to analyze the text of this court decision and find out from this decision information about the stressfulness of this asset and our legal rights to it. However, our opponent did not.

It is difficult to prove the negligence of the buyer of the property in court. Therefore, our lawyers used a relatively new tool for the domestic economic process – asking a number of questions to the opponent, the answers to which formed the basis of the courts’ conclusion about his dishonesty.

As a result, the Supreme Court concluded that the property is not only to be extorted from our opponent, but also to be extorted from him as from an unscrupulous acquirer. Such a conclusion may further recover from the opponent the income received by him from the asset for previous years, which will also be used as an additional source to repay creditors’ claims and reduce the debt burden of our client.

The Supreme Court noted that our new lawsuit does not violate the principle of binding court decisions. According to the Supreme Court, in this case the plaintiff’s lawyers proved the existence of important and compelling circumstances that allow an exception to the principle of res judicata. Such exceptions are extremely rare for Ukrainian jurisprudence.
The Supreme Court also agreed that our plaintiff had borne an excessive burden by being forced to defend his property rights for 10 years. Accordingly, the claim was upheld and justice was restored.

Contributing Advisors