VTB has become subject to a redistribution of assets

The Odessa oil refinery, currently owned by VTB, is the first Russian asset at risk to be nationalized by Ukraine. The Ministry of Internal Affairs of that country believes that the refinery was illegally assigned to the Bank against a debt by Sergey Kurchenko – who is involved in a criminal case. Lawyers believe that VTB was a bona fide purchaser in that transaction, but the criminal case may require seizure of former assets of Mr. Kurchenko.

Advocate Alexander Bolomatov, Partner of the Law Firm "YUST", says that the transfer of an asset to the bank against a debt is standard world practice, the financial institution being a bona fide purchaser in the case. According to him, the actions of the Ukrainian authorities are rather like nationalization. However, Mr. Bolomatov believes that the Ukrainian law enforcers will demand seizure of Sergey Kurchenko’s assets within the scope of the criminal case, and then the return of the Odessa refinery to VTB will be practically void. The lawyer is of the opinion that, if the agreement between the structures of Mr. Kurchenko and the bank was made under English law, VNB will have to resort to international arbitration against the businessman himself. He adds that the bank certainly may contest the judgments by the Ukrainian courts, but this will likely be futile in the current political situation.