Hillmont Partners and AVELLUM once again defended the rights of American investors

For the second time this summer, Hillmont Partners and AVELLUM successfully defended the rights of American investors Argentem Creek Partners and Innovatus Capital Partners in the high-profile Olimpex bankruptcy case.

Argentem Creek Partners and Innovatus Capital Partners provided GNT Group with a USD 95 million facility. The loan was secured by assets and suretyship of Ukrainian and foreign companies, including the suretyship from Olimpex.

However, the GNT Group defaulted on its debt repayments and attempted to withdraw the property from Olimpex’s ownership through a complex scheme of business transactions. The GNT Group mortgaged the assets to banks in breach of loan agreements with American investors. Just before the opening of bankruptcy proceedings against Olimpex, its opponents implemented a complex multi-level scheme to withdraw the property: the bank sold the mortgaged property to a third party, which, in order to create a “bona fide” purchaser, sold the mortgaged property to another legal entity, and the latter mortgaged the property in order to make it difficult to return.

This is already the second case in which the Supreme Court has suspended the scheme for the withdrawal of Olimpex’s collateral property – part of the grain terminal in the port of Odessa and the grain preparation terminal (dry port).

The Supreme Court, adhering to its position and conclusions, not only analysed the content and circumstances of each transaction separately, but also properly assessed all business transactions that constituted a scheme for evading obligations to creditors. After all, the property was sold at an undervalued price, and the contracts contradicted the debtor’s obligations to creditors. Instead, their true purpose was not ordinary commercial activity, but rather to prevent to prevent the satisfaction of claims in bankruptcy proceedings. Such actions demonstrated a clear misuse of private law instruments for purposes contrary to their lawful intent, which was the basis for granting the claim.

This decision of the Supreme Court demonstrates new approaches in judicial practice concerning the invalidity of fraudulent transactions (transactions concluded to cause harm to creditors) in bankruptcy cases. The decision once again demonstrates the Court’s comprehensive analysis of the scheme of transactions and relations between companies, as well as its assessment of their impact on the debtor’s financial position and the possibility of satisfying other creditors’ claims.  This approach enhances the protection of creditors against unscrupulous debtors and misuse of collateral property.

Hillmont Partners was represented in the case by managing partner James Hart, senior partners Andrii Nyzhnyi and Valentyn Zasukha, and partner and head of the Lviv office Andrian Artsishevsky.

AVELLUM was represented by senior partner Kostiantyn Likarchuk and partner Vadim Medvedev.