Kyiv’s Commercial Court ordered Ukraine’s railway monopoly to pay Sperbank $17 million to settle debts to the Russian-owned bank, according a court ruling published on July 16.
The court ruling only partially satisfies Sperbank’s claim of $68 million in debts owed to the creditor loaned to Donetsk Railways from December of 2017 to November 2020.
While Sperbank opened the line of credit to Donetsk Railways in 2011, Ukrzaliznytsia is being forced to pay back the debt as the legal successor to the state-owned Donestk Railway enterprise.
Ukrzaliznytsia opposes this decision on the grounds that it doesn’t have access to documents related Donetsk Railways, nor its vehicles that are located in the occupied territories in Eastern Ukraine. The state railway considers this decision “threatens national security of Ukraine and stability of the railway industry.”
The loan was originally provided to Donetsk Railway state enterprise to refinance existing loans and to make capital investments into new means of transportation, but the state enterprise never managed to pay it off. The bank charged interest on the railway’s debt from December 2017 to November 2020.
In June 2020, Ukrzaliznytsia appealed to Ukraine’s Supreme Court, but the Grand Chamber of the Supreme Court ruled in favor of Sperbank, upheld a lower court’s decision that Ukrzaliznytsia is the legal successor to Donetsk Railways and ordered Ukrzaliznytsia to pay off debts that belonged to Donetsk Railway state enterprise.
But even if Ukrzaliznytsia pays off the debt, it won’t get its railway vehicles back, including more than 20,000 freight cars, nearly 6,000 railroad cars, almost 6,000 passenger wagons and over 300 locomotives that are also currently located in the occupied territories.
“We still don’t have access to these assets of the Donetsk Railway. Accordingly, simply paying off all debts is devoid of business logic,” Oleg Zhuravlov, a member of the supervisory board of Ukrzaliznytsia, told the Kyiv Post.
Zhuravlov said that Ukrzaliznytsia doesn’t have to pay off debts of the Donetsk Railway enterprise due to a moratorium prohibiting collecting debts from the state railway monopoly for property in the occupied territories.
However, back in May, the Eastern Commercial Court of Appeal ruled that the property of the Donetsk Railway enterprise is located both on the occupied territories and those controlled by Ukrainian authorities and thus Ukrzaliznytsia could be forced to pay back the debt.
In February, Sberbank won another lawsuit with Ukrzaliznytsia for $56,1 million in debts.
According to the estimates, in total, Donetsk Railway enterprise owes around $6,5 billion to the lenders, including Russian banks Sberbank and VTB Bank.
