Representatives of Investohills took part in a round table discussion on the crisis in the problem debt market
On December 22, the committee on finance, tax and customs policy together with the deposit guarantee fund of individuals and the Association of Financial Institutions held a round table in the format of a video conference on the topic: “Crisis in the problem debt market of insolvent banks. Solutions”.
The meeting was attended by people’s deputies, representatives of the judicial branch of government, the Cabinet of Ministers, the Ministry of finance, the National Bank of Ukraine, the Deposit Guarantee Fund of individuals, the state enterprise “ProZorro.Sales”, specialized associations, professional market participants of distressed assets, public organizations.
The participants discussed some aspects of repayment of problem debts of insolvent banks, invalidation by courts of open auctions (auctions) for the sale of assets of insolvent banks.
As the moderator of the meeting, MP Andriy Motovilovets, noted, the study of statistics on the sale of distressed assets showed that there are issues with the implementation of the law, which prohibits the use of judicial support and stopping trading. So, when the Deposit Guarantee Fund sells distressed assets to individuals, the courts make decisions, even on claims of people who are not related to trading, and these decisions block the sale.
Andriy Motovilovets also said that in 2020, the courts canceled 218 auctions, and in 2021 – 44. According to him, this is becoming an established practice.
“If there are problems at the legislative level, we are ready to change it to help state institutions work,” he said, adding that the market for distressed assets should be stable and develop further.
Managing Director of the Deposit Guarantee Fund for Individuals Svitlana Rekrut stressed that the problem debt market of insolvent banks is experiencing a crisis caused by unclear rules of the game. This causes more risks, reduces the amount of capital in the market and prices, explained Svitlana Rekrut. According to the managing director, the judicial branch of government has become an institution that destroys these rules.
Representatives of the Fund also noted that appeals of trades, as a rule, occur in relation to large cases, the book value of which is more than tens of millions of hryvnias.
People’s deputy Oleksiy Movchan said that as of today, 240 cases are under consideration in the courts to appeal the results of trading in the amount of UAH 3.5 billion. “The practice of manipulating trading assets of failed banks through legal proceedings has appeared in recent years and it is increasing. This may pose a threat to the entire deposit guarantee system,” he stressed and called on the committee on finance, tax and customs policy to analyze court decisions and work out changes to the legislation to eliminate threats.
Daria Marchak, Chief Operating Officer of SE “ProZorro.Sales ” noted that the problem with the seizure of assets is observed not only during the bidding of the deposit guarantee fund. According to them, blocking trading in this way becomes systematic.
Chairman of the committee on finance, tax and customs policy Daniil Hetmantsev expressed the opinion that the problem is not in legislative regulation, but in bringing to criminal responsibility judges who made illegal decisions. “This should be a joint work of the deposit guarantee fund or the state enterprise ProZorro.Sales ” with the prosecutor general’s office,” he stressed.
Daniil Hetmantsev noted that he is ready to join in bringing at least one malicious case to justice.
During the Round Table, business representatives drew attention to the existence of a problem not only with stopping or delaying trading, but also with canceling their results in court. They made suggestions for legislative changes that could solve the problem.
In turn, Nikolay Melnik, a representative of the Investohills group of companies, the largest player in the NPL market, noted that the problem with blocking trading and canceling trading results is taking on a new scale – today there are already decisions of judges (in more than 20 cases), which are held in three instances of courts that cancel trading. And it is precisely not on the grounds of procedural violations or violations of the bidding procedure, but because unscrupulous depositors or related persons find far-fetched leads to cancel these auctions. These decisions have already formed judicial practice and judges apply it.
Market participants believe that these problems can be solved by adopting legislative amendments to the procedural codes, the law on judicial collection, etc.by the Verkhovna Rada.
They also propose to legally limit the number of persons who can appeal and block auctions through court decisions. In particular, to prevent persons who were not bidders or persons who are associated with ex-owners of bankrupt banks from doing so.
In turn, Vlad Blidchenko, general director of the Association of Financial Institutions (AFI), drew attention to the fact that when making decisions to cancel or cancel auctions or declare them invalid, the courts simultaneously do not adopt mechanisms for implementing such decisions.
“There should be restitution,” he said.
After all, there is a situation when, on the one hand, a new creditor cannot be recognized as a new creditor, and the previous creditor cannot be considered a sufficient creditor, since there was a reverse assignment. And as a result, credit pools simply hang.
Representatives of the judicial branch of government also spoke at the meeting, who noted that any person has the constitutional right to apply to the court and the court is obliged to make a decision. According to the representative of the Supreme Court, in order to coordinate positions on the consideration of cases related to the sale of distressed assets, a resolution of the Grand Chamber of the Supreme Court should be adopted, which will provide explanations for the entire judicial system.
Summing up the results of the round table, Andriy Motovilovets noted that specific articles of the law “on the deposit guarantee system” and the Civil Procedure Code do not work. Failure to comply with these articles, according to him, causes billions of dollars in losses.
He called on the parties to study the materials provided during the round table and develop their proposals. According to the people’s deputy, the next meeting of government representatives will be held in the near future, which will determine what legislative changes need to be made to address the issues of the problem debt market of insolvent banks.
Andriy Motovilovets stressed that the committee on finance, tax and customs policy is ready to be the author of the bill if it turns out that there is a problem in the legislation.