Supreme Court Invalidates Results of the Auction to Sell the Property of Tulchynsky Khlibokombinat owned by Ukraina Farm
On June 14, 2022, the Supreme Court, sitting as the Commercial Court of Cassation, canceled the Decision of the Vinnytsia Oblast Commercial Court in bankruptcy case No. 15/68-10 of August 31, 2021, and the Judgment of the Northwestern Commercial Court of Appeal of November 24, 2021, and made a decision to satisfy the claim of the liquidator of VAT Tulchynsky Khlibokombinat and invalidate results of the auction dated June 17, 2013, to sell a complex of buildings and structures with the total area of 5,090 square meters situated in 166 Lenina Street in the city of Tulchyn of Vinnytsia Oblast on a 2.5562-hectare land plot (cadaster number 0524310100:01:011:0106) at the same address, together with the equipment and vehicles as listed in, and covered by, the sales contract in respect of the said property entered into between Tulchynsky Khlibokombinat and Ukraina Farm.
The property in question was mortgaged and pledged to PAT Bank Forum, with the claim interest therein purchased by AT ZNVKIF Investohills Helianthus as one of the principal creditors in the VAT Tulchynsky Khlibokombinat bankruptcy case.
With its decision, the court established that the auction procedure had been violated:
- there was no auction announcement on the website of the High Commercial Court of Ukraine (Articles 1 and 51(5) of the Law);
- only one prospective buyer – Ukraina Farm – took part in the auction (Article 55(1) of the Law);
- no competitive procedure was held to appoint the auction organizer (Article 49 of the Law);
- no ruling was issued by the court to find the auction organizer (commodity exchange) a party to the bankruptcy case (item 33(4) of Information Letter of the High Commercial Court of Ukraine No. 01-06/606/2012 of March 28, 2013);
- the auction was held 11 months after the entry into a contract with the commodity exchange, while the law required the auction to be held within two months (Article 52(1) of the Law).
Thus, acting rightfully, the Supreme Court restores justice, makes lawful and reasonable decisions protecting the interests of creditors, and returns assets disposed of at bargain-basement prices with a gross violation of the law into the ownership of bankrupt companies.
It is a good contribution to restoring Ukraine’s investment appeal.