Lack of Discipline
“The year of 2009 was a tough one for many Ukrainian banks, ILF partner Oleksiy Kharytonov says. On the one hand, banks strove towards capitalization by increasing their share capital and attracting subordinated loans. On the other hand, banks had to wage war with their debtors to ensure repayment of loans (by the end of 2009 bed debts amounted to 30-40% of the entire loan portfolio, not including restructured debts). The most notable fact is that in this war the national enforcement authorities very often played on the side of borrowers but not of creditors: banks were faced with the hiding of assets and mass bankruptcies of companies and sole entrepreneurs, while sophisticated debtors tried to invalidate their loan and pledge agreements, protract recovery from pledged property and subsequently make impossible enforcement of court rulings on debt recovery. Banks attempted to initiate criminal proceedings against bad debtors and their affiliates. However, in general such steps were unsuccessful. Some legal barriers were encountered by those banks willing to sell problem debts — many debtors accused the officers of banks of breaking the rule of banking secrecy, and the State Commission on Regulation of Financial Services Market took the stand that collateral (e.g. pledge, etc.) cannot be assigned along with a debt to a new creditor. So it was no wonder that the temporary administration procedure was actively used by the National Bank of Ukraine in 2009.”
Despite the unfavorable situation on international financial markets, one of the most reputable and recognized local practices, Sayenko Kharenko, represented international lenders and Ukrainian borrowers in a number of high-profile finance transactions. In particular, the firm has advised the EBRD on a USD 250 million subordinated loan and a USD 134 million syndicated loan to JSC Ukreximbank, which was the only syndicated loan to a Ukrainian bank this year. The finance team has acted for Ferrexpo on attracting a USD 230 million syndicated loan arranged by Deutsche Bank. The firm became the leader on merit in advising on the largest debt restructuring in the financial sector. More specifically, it represented Credit Suisse on the refinancing of a USD 465 million loan provided to the State Road Service (Ukravtodor) by Morgan Stanley in 2007; Barclays Bank on restructuring of a USD 550 million syndicated loan facility to the State Administration of Railway Transport of Ukraine (Ukrzaliznytsya); Standard Bank on restructuring a USD 100 million syndicated loan provided to Ukrainian Radio Systems. Sayenko Kharenko’s counsel Nazar Chernyavsky, who participated in all related transactions of the firm, was promoted to partner. Michael Kharenko is widely respected by the market.
The local banking and finance team of international law firm Baker & McKenzie is considered among the strongest in Ukraine. The team recently acted for Standard Bank Plc as arranger and lender under a USD 21 million loan facility to OJSC Commercial Bank Khreschatyk; Development Holdings Limited with respect to a USD 32 million secured non-revolving credit facility line; advised on a USD 4.4 million loan from the EBRD to Terminal Brovary LLC. Serhiy Chorny, partner, heads the practice and is one of the top practitioners. Glib Bondar, Anna Makedonska, Oleksandr Svyryd, Andriy Nikiforov contributed to the mentioned significant highlights. Being active in M&A deals in the sector, the office recently acted as a law counsel with respect to the investment by KfW and EBRD into the equity of Public Joint-stock Company Megabank and to the minority shareholder of Joint-stock Commercial Innovation Bank UkrSibbank on the sale of its 24.5% shareholding in UkrSibbank to BNP Paribas Group. Ihor Olekhov, partner, led the group in M&A projects with contributions from associates Ganna Pushkarova, Anna Voropayeva and Hanna Shtepa.
Asters has a long-standing reputation for its highly substantial experience in structuring, documenting and negotiating various secured and unsecured financing transactions in Ukraine. The firm’s banking and finance team includes one of the most praised banking lawyers in the country, senior partner Armen Khachaturyan and partners Svitlana Poroschuk and Iryna Pokanay. In 2009 the firm’s lawyers advised the EBRD on a number of finance projects in Ukraine, including a secured loan facility of up to USD 50 million provided to NCH New Europe Property Fund L.P.; USD 100 million subordinated loan to UkrSibbank; USD 34.4 million syndicated loan facility provided to Terminal Brovary LLC. Asters provided legal support to ING Bank N.V. in connection with a USD 20 million pre-export finance facility to Grain Trading Company (GTC); Swedbank AB in connection with the merger of its Ukrainian subsidiaries JSC Swedbank and JSC Swedbank Invest and USD 390 million, a capital increase in JSC Swedbank. The firm also advised a large beverage entity on restructuring its debt obligations to various lenders and represented a number of international banks with respect to their claims to Ukrainian debtors and assisted in the restructuring process.
One of the most recognized banking and finance team in the country is headed by Olga Khoroshylova at Magisters. In 2009 the firm advised its clients in connection with restructuring of borrowings attracted in the previous year in terms of complex international lending transactions. Recent work highlights include representation in restructuring such borrowers as Naftogaz of Ukraine, Alfa-Bank, the State Administration of Railway Transport of Ukraine, etc.
Gide Loyrette Nouel, whose head is Karl Hepp de Sevelinges, advised foreign banking institutions and their consortiums on loan facilities, handled projects on intercompany loans, multi-jurisdictional M&A transactions, project finance transactions and debt restructuring typical for 2009. Recent notable deals included advising the EBRD in connection with a USD 20 million unsecured facility granted to a Ukrainian bank to finance SME/MSE sub-loans and advised Evraz Group, one of the largest metallurgic and mining companies in Europe, in connection with a USD 90 million secured facility granted by Prominvestbank to OJSC Trade House Evrazresource Ukraine. As a key practicioner, Yaroslav Gregirchak is a recognizable and respected name on the market.
In addition to significant experience of cross-border lending, the Kiev office of Salans developed advice on debt restructuring. The lending projects in 2009 included: advising Noble Resources Ukraine LLC regarding a USD 50 million financing programme from the EBRD; Argo Real Estate Opportunity Fund Limited (AREOF); North Asset Management in relation to a EUR 75 million loan facility from Marfin Laiki Bank. Other major highlights of restructuring work included advising a leading international investment bank on the restructuring of its USD 930 million loan to the State Road Administration of Ukraine under sovereign guarantee; and participation in the largest debt restructuring in the banking sector of Ukraine, namely advising commercial bank Nadra regarding the reorganization and restructuring of the bank’s external debts with about 70 bank lenders and at least 30 Eurobond holders. The projects are led by Natalia Selyakova, partner and head of the banking and finance group in Ukraine.
The finance team of the Kiev office of DLA Piper is regularly involved in cross-border financing transactions. It recently advised the International Financial Corporation (IFC) on financing of Swedbank and Swedbank Invest in Ukraine in the amount of USD 84 million. The team recently acted as the sole legal advisor for the EBRD in projects of provision of multi-million financing to a Ukrainian oil and gas company as well as an international power company. A notable amount of work in 2009 was devoted to multi-million debt restructuring of several large Ukrainian companies hit by the financial crisis as well as significant involvement in M&A transactions in the country’s financial sector, representing financial groups in the sale and purchase of assets and loan portfolios; representing banks in their tender sale, etc. DLA Piper recently acted for the Erste Bank AG on provision of secured financing to one of the largest Ukrainian industrial groups; advised a well-known Russian bank with significant presence in the CIS on providing a USD 100 million loan to a major Ukrainian agricultural producer, as well as on setting up a joint venture with a leading Ukrainian concrete producer. Oleksandr Kurdydyk, partner and head of the practice has a wealth of expertise of work in complicated largescale deals. Illya Muchnyk, Dmytro Derkach and Natalia Fuklyeva, Rodion Ignatenko were all engaged in the office’s practice.
The team of Andriy Kravets & Partners represents major financial institutions and international banks in the largest and most sophisticated cross-border financings in Ukraine. In 2009 the team supported secured mortgage loans by the Finnish Fund for Industrial Cooperation Ltd and Magyar Export-Import Bank Zrt. provided to Ukrainian companies. Recent highlights also include advising Deutsche Pfandbriefbank AG in connection with corporate reorganisation of a Ukrainian company acting as a borrower; Cadogan Petroleum Plc in connection with introduction of changes to relevant loan and supply agreements; Interpipe Group in connection with introduction of changes to transactional documentation regarding an earlier handled Eurobond issue; Nokia Siemens Networks Ukraine in connection with obtaining a price evaluation act from the State Information and Analytical Centre for Monitoring of External Commodity Markets, and The Royal Bank of Scotland in connection with extensive analysis and clarifications on how the activities of a depositary and receptor are regulated by banking legislation in Ukraine. Julia Samoylova and Daria Volkova are led by partner Andriy Kravets, who enjoys an excellent reputation among peers in the last couple of years.
In 2009 the banking and finance practice team of Vasil Kisil & Partners was involved in a vast number of significant projects in the Ukrainian banking sector. The firm’s leading experts, namely Denis Lysenko, partner and Yulia Kyrpa, senior associate, advised Swedbank AB (Sweden) on restructuring of its Ukrainian subsidiaries’ non-performing loans portfolio and implementation of SPV structure; provided comprehensive legal support to Prominvestbank and Russian Standard Bank in various regulatory and corporate issues, including those related to compliance with the new Joint-Stock Companies Act requirements, and also represented a number of corporate borrowers in debt restructuring transactions. The firm’s legal practitioners also successfully completed the merger of SEB Bank and Factorial — two Ukrainian subsidiaries of Skandinaviska Enskilda Banken AB (Sweden), advised SEB Bank (Ukraine) on its non-performing loans portfolio restructuring and registered capital increase, and also acted for Global Space Management (Israel) in establishing its cooperation relations related to lending transactions with UkrSibbank.
The banking and finance practice of Konnov & Sozanovsky has substantially diversified for the last years. In addition to focusing on inter-group finance the team acted on behalf of borrowers and lenders in a number of transactions. In the major recent transactions Konnov & Sozanovsky advised Logoplaste Ukraine, a subsidiary of Logoplaste, in its capacity of a borrower on a EUR 4.1 million loan from the EBRD; as wellas lenders — Cooperatieve Centrale Raiffeisen-Boerenleenbank and Fortis Bank N.V. on the commodity-based pledge agreement ancillary to USD 230 million Credit Facilities Agreements to Interfood B.V. and its related parties. Borys Lobovyk is the main figure in this practice.
The team of Schoenherr Ukraine led by Ilona Zekely, has conducted complex real estate finance and acquisition finance transactions in previous years, as another office had to reorient legal support to restructuring in 2009. Recent work highlights included advising client lenders, more specifically, representing Erste Bank in restructuring USD 78.43 million financing to GLD for the development of West Gate, a logistics centre in Kiev and on restructuring the acquisition and development financing of a logistics centre in Ukraine.
The Kiev office of Chadbourne & Parke is known for advising international institutions like the EBRD and IFC in their lending transactions in Ukraine. In 2009 the firm advised the EBRD in providing an unsecured loan to Ukreximbank and OTP Bank under the Ukrainian Energy Efficiency Programme (UKEEP) and is involved in representing the IFC in connection with debt and equity financing of a mid-sized Ukrainian bank. The firm’s project finance workload was marked with representation of Turkcell in USD 285 million buyer credit financing 2G and 3G equipment for Turkcell in Turkey and a USD 75 million buyer credit financing 2G equipment for Astelit, a Ukrainian company which is majority owned by Turkcell. The team of practitioners includes Oleg Mazur, Oksana Firsova, Olena Repkina and Sergiy Onishchenko.
After the official establishment of its Ukrainian office in Kiev, Clifford Chance focused sufficiently on legal services in banking and finance, as obviously proven by its projects list. The team, with key involvement from Jared Grubb, Olexiy Soshenko and Roman Stasiv advised on cross-border lending transactions. More specifically, it advised Intesa SanPaolo S.p.A. in connection with a EUR 343 million senior facility agreement for Guala Closures S.p.A. Quite a significant portion of the team’s workload consisted of real estate finance projects. For example, advising London & Regional Properties in connection with a USD 140 million facility arranged by Hypo Real Estate Bank International AG relating to the Globus Shopping Centre in Kiev.
Beiten Burkhardt in Kiev has been involved in the advising EBRD in its crediting of Ukrainian companies, like EUR 58 million funding to CJSC Centravis Production Ukraine and the USD 80 million subordinated loan to Joint-Stock Commercial Bank Forum. Partner Marina Tegypko led the team.
The banking and financial work of CMS Cameron McKenna involves representing major financial institutions and international banks in lending transactions in favor of communal enterprises in Odessa, Ivanko-Frankovsk, Lvov; subordinated loans, advised on revolving facility agreements; was particularly active in real estate finance transactions in Kiev and Odessa as well as in restructuring and refinancing projects in this sector. The banking and finance practice group includes partner Adam Mycyk, who is highly respected due to his experience of management on the Ukrainian market as well as Peter Malecek, Taras Burhan and Victoria Kaplan.
Volkov Koziakov & Partners assisted the European Bank for Reconstruction and Development in the process of granting a loan to one of the largest Ukrainian agricultural holdings. In addition, ABN AMRO, a large Dutch bank, was advised by the team in connection with the granting of a USD 25 million loan facility to a Ukrainian agricultural company. The firm’s banking practice is headed by Oleksiy Volkov, managing partner.
In autumn 2009 the tax and legal team of Deloitte completed on a “turnkey” basis a project on setting up lending and lease businesses in Ukraine and a project related to restructuring of the distressed loan portfolio for a mid-sized Ukrainian bank. Ilya Soykis, Dmytro Gadomskiy, Volodymyr Kutsenko are all practitioners involved in handling such projects.
The practice of Okhrimchuk Grushyn Khandurin has seen an increase in restructuring work on behalf of existing clients for high sum transactions. For example, it advised STEMCOR UK LIMITED, a leading provider of marketing, finance and logistics services to the steel industry, in negotiations on restructuring and rescheduling a USD 92 million loan; advised BNP Paribas with respect to restructuring EUR 90 million; conducted projects on debt restructuring concerning loan facilities provided by the firm’s client ABN AMRO Bank. Another notable deal is Raiffeisen Zentralbank Osterreich AG (RZB), the third largest bank group in Austria on direct financing of USD 20 million provided to Metinvest B.V. Andriy Grushyn, Olga Balan and Olena Tykhonyuk are key practitioners.
ENGARDE’s encompassed pratitioners have experienced of advising clients on various issues of banking and financial law. In 2009 senior partner Andriy Vyshnevsky led the team of attorneys in representing the Kherson Shipbuilding Yard in connection with restructuring and rescheduling a USD 50 million debt to Kreditprombank; a group of lenders in connection with USD 40 million corporate debt restructuring, including development of a long-term recovery and development program to the Dnipropress industrial plant; Veres in connection with restructuring and rescheduling of a debt to Ukrsotsbank, including domestic bond redemption for a total value of USD 10 million; Litavio Consulting Ltd in the USD 17 million financing by Merrill Lynch for leasing acquisition of a passenger plane from Jetalliance; a real estate company Eugene in the USD 40 million financing from foreign lenders; Swiss investment company NESTEX AG in the intergroup loan facility provided to its Ukrainian subsidiary. Roman Ognevyuk, the firm’s counsel, also has solid expertise of handling finance work.
The banking and finance practice of INTEGRITES is one of the most rapidly developing ones. In 2009 the firm’s team was strengthened by Oleksandr Aleksyeyenko, a partner of the banking and finance practice. Overall INTEGRITES has been successfully providing legal advice to banks, financial institutions and other clients on issues of secured lending, project and pre-export finance, M&A and regulatory issues. The recent projects contain comprehensive legal support to the OTP Bank of USD 13 million. The firm also acts as a legal advisor for several top European banks, namely Piraeus Bank, Calyon Bank and Credit Europe Bank.
In 2009 Gvozdiy & Oberkovych law firm has significantly grown its finance practice and enhanced high-profile client portfolio. The firm’s lawyers were involved in a number of notable cross-border financings and advised on debt restructurings as a result of the credit crunch in Ukraine. In particular, the firm acted for multinational company PSG-International a.s. in attracting export financing from Ceska exportni banka (CEB) and Ceskoslovenska obchodni banka (CSOB) to fund a EUR 25 million project on development and construction of co-generation facilities in Western Ukraine; gave advice on a EUR 15 million default project on construction of an electricity power plant managed by a large Ukrainian company and financed by CSOB, and on a EUR 40 million loan by CEB to fund development and construction of an electricity plant in Eastern Ukraine. The team also provided comprehensive legal support in a number of financings by foreign companies provided to their Ukrainian subsidiaries, including loans to Agora Ukraine and Agora Press from Agora S.A.; to CCS Ukraine from JSC Cyfrowe Centrum Serwisowe, and Cambridge Staffing Solutions LLC from Cambridge Staffing Solutions USA. Both partners Sergiy Oberkovych and Valentyn Gvozdiy were particularly active in finance work handled by the firm.
In 2009 the banking and finance practice of Arzinger, as led by partner Anna Pogrebna, was focused on supporting KfW in transfer of a credit portfolio and collateral (loans provided for Obolon and a subsidiary company of KfW-IPEX-Bank IDC); advised Danske Andelskassers Bank and Nordic Environment Finance Corporation on providing a credit line and its collateral of a Ukrainian agricultural company, legal assistance to the project; counseling Turkish bank Turk Ekonomi Bankasi, Bank of the Netherlands TEB N.V.
AstapovLawyers split their time between supporting international debt restructurings, secure lending and corporate matters between domestic banking players. The firm’s leading position on the market is confirmed by advising on debt restructuring of the Ukrainian bank Rodovid, PKO BP/Kredobank on a loan portfolio. The team was involved in a notable deal to transfer the assets of the Ukrainian Rodovid Bank to Ukrprombank. Cross-border lending projects include an agreement between Rias Trading S.A. and Fortis Bank (the Netherlands) N.V.; secured financing of a major oil producer and Ancile Investment Company Ltd, etc. Tatyana Kuzmenko heads the practice.
D&D Lawyers, established in 2009, whose young team is led by Viktor Dovhan, has already finalized a number of projects in the area of debt restructuring. The firm counseled Bank Lviv, Kredobank, VAB Leasing, in connection with debt restructuring and rescheduling; advised on certain aspects of Ukrainian corporate and banking law in connection with potential acquisition of a Ukrainian bank. Yuriy Voytsitskyi, Hanna Mykolska and Dmytro Kashkin are all at the core of the practice.
International Law Offices is known on the market for supporting lending with the participation of the EBRD in the South region of Ukraine. In 2009 the team acted for the EBRD in providing loans for construction of the container terminal and dry port in Odessa Commercial Sea Port. Natalya Shpak and Taras Shepel focused on these projects.
The finance practice of Lexwell & Partners was devoted to inter-group financing and developing legal policy for debt collection. In 2009 the firm supported the inter-group loans of subsidiaries of the Sumitomo Corporation and advised Universalbank on structuring problem loans.
Paritet Law Firm advised global pharmaceuticals market leaders (Bayer Healthcare, Merck & Co) on banking and other requirements of Ukrainian legislation; assisted the biggest Ukrainian transport companies (Avtologistika) with respect to restructuring bank loans and the start up and structuring of the first Ukrainian automotive auction. Taras Koval, Yuliya Cherkashina and Oleksii Domashenko covered these projects.
The tax and legal department of Ernst & Young was engaged in advising its clients from the Ukrainian banking sector on the tax, legal and regulatory implications of various transactions in the country. More specifically, on issues arising from various options of transferring non-performing loan portfolios denominated in UAH and foreign currency to SPVs established in Ukraine and offshore; transfer of secured loans denominated in foreign currency to the parent bank and the venture fund; implications from the sale of loan portfolios from a Ukrainian bank to a factoring company. Senior manager Igor Chufarov handles the projects listed in the office.
In serving the domestic banking market ILF has shown particular expertise in the field of collecting debts by developing comprehensive legal strategies in terms of dispute resolution. Oleksiy Kharytonov and Olena Khytrova are key practitioners in this project field. Olena Kibenko and Anton Zinchuk are involved in loan transactions. For example, representation of Megabank in connection with a USD 10 million subordinate loan to EFSE Ukraine Ltd investment fund.
Grischenko & Partners has seen an increase in restructuring projects lately. In 2009 the team represented lenders in the course of restructuring of loan and Eurobond borrowing of Naftogaz of Ukaine.
Pavlenko & Poberezhnyuk law group has continued to develop its practice and over 2009 its workload included legal assistance to the temporary administration of Ukrgazbank in its state recapitalization, including an additional issue of securities with the main purpose of state purchase, conducting due diligence, including issues on bank assets, rights and liabilities. The sum of internal government bonds is UAH 3.1 billion. Both partners, Oleksandra Pavlenko and Larysa Poberezhnyuk, participate in this area of practice.
The practice of the KPD Consulting law firm, as led by Mykola Dolenko, has been involved in advising Ukrtechpromleasing on leasing issues and secured loan financing by a Cypriot lender to a Ukrainian developer of a multi-functional centre project. The team provided consulting on regulatory issues in the sector, like currency control issues, NBU requirements, new requirements to the constituent documents of a JSC.