LONDON – 2 September 2022 – The Civil Fraud & Business Disputes team from Greenberg Traurig London have secured a victory for client Bank Frick (a Liechtenstein bank) when it was successful in striking out a $26 million claim made against it by the Deposit Guarantee Fund for Individuals (DGF) acting in its stated capacity as liquidator of the Ukrainian bank National Credit Bank (NCB), PJSC. The Judgment of Sir Anthony Mann was handed down on 25 August 2022.
The claims against Bank Frick were brought under Section 423 of the Insolvency Act 1986 and alleged that Bank Frick, and others, had been complicit in a series of transactions orchestrated by two senior officers of NCB, Mr Onistrat and Mr Klymenko, with the purpose of putting assets out of reach of NCB’s creditors or of otherwise prejudicing their interests.
In this case, the DGF claimed that, between 2013 and 2015, Mr Onistrat and Mr Klymenko had caused NCB to enter into a series of transactions by which monies were transferred to Bank Frick and then pledged as security for loans made by Bank Frick to entities which, the DGF claimed, were also controlled/owned by Mr Onistrat and Mr Klymenko. The DGF claimed that the men had therefore acted with the relevant purpose as required by s.423 of the Insolvency Act 1986.
In July 2021, Bank Frick applied to strike out the claim on the basis that there was no sufficient pleading of the statutory purpose under s.423 of the Insolvency Act 1986. Instead, the pleaded material demonstrated that Mr Onistrat and Mr Klymenko had not acted with the purpose of putting assets out of reach of creditors but rather with the purpose of stealing NCB’s assets and benefiting themselves.
The key findings which led to the Judge’s conclusions included that:
- The directors of NCB intended to benefit themselves from these transactions which was clearly their purpose.
- The DGF’s reliance on the directors' foresight of the inevitable consequence of the transaction as justifying their purpose does not follow in this case.
- The Court could not conclude that the directors had, as a subjective purpose, damage to creditors in mind. They were stealing NCB's money and there is no reason for inferring that they had any idea to the creditors at all even if they knew the financial state of NCB.
- It was not suggested by the DGF that a trial would bring any further benefits in terms of analysis or anything else. The law was clear enough and no development of the law needed to be considered.
The Greenberg Traurig London team was led by Shareholder Hannah Blom-Cooper (UK Civil Fraud and Business Disputes) who was assisted by Of Counsel Mehmet Karagoz (UK Civil Fraud and Business Disputes) and Associate Stephanie Silverston (UK Civil Fraud and Business Disputes). The Counsel team were Andreas Gledhill QC and Luka Krsljanin of Blackstone Chambers.
About Greenberg Traurig’s London Litigation Practice: The practice brings together an experienced team of more than 40 lawyers acting in a broad range of disciplines. Skilled in commercial litigation, civil fraud and asset recovery, business and financial disputes, contentious regulatory work, white collar crime, insolvency, arbitration, and antitrust litigation, we counsel global corporations, financial institutions, high-net-worth individuals, and government agencies on complex cross-border disputes.
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