News (#11 November 2018)


Settlement reached between Kyivteploenergo and NJSC Naftogaz of Ukraine

On 10 October the Economic Court of Kyiv approved the settlement agreement concluded by the Public Utility Provider Kyivteploenergo and NJSC Naftogaz of Ukraine.

The subject of the settlement agreement is debt obligations with available sources to offset them, such as consumer debts.

“After getting the court resolution, Kyivteploenergo will be able to enter into gas supply agreements and begin the procedure of restoring the service of hot water supply for four districts of Kyiv,” said Petro Panteleev, deputy chairman of Kyiv City State Administration.

Following delicate negotiations and the participation of Government authorities, a subvention was allocated to repay the tariff differential. This obligation of the state budget to heat supply enterprises comes to UAH 729 million. The penalties and fines are now written off. The subject of the agreement is only debt obligations that have sources for their offsetting.

As is known, many Kyiv residents have had no hot water in their homes for several months now: some from May, while others from July 2018. This situation arose due to the fact that the duration of the agreement concluded between Kyiv City and Kyivenergo has expired, and from August the Public Utility Provider Kyivteploenergo undertook the function of providing the city with heat.

However, NJSC Naftogaz of Ukraine refused to sign the agreement with Public Utility Provider Kyivteploenergo because of the unresolved situation with debts for gas supply. This concerned about UAH 5 billion (the amount included consumer debts, as well as fines and penalties accrued by Naftogaz to Kyivenergo).


Raiffeisen Bank to try to seize property of Ukrainian subsidiaries of Milkiland via court

On 5 October the Economic Court of Kyiv opened a case against Private Enterprise Ros, a subsidiary of Milkiland Dairy Group.

The lawsuit against the manufacturer was initiated by Raiffeisen Bank International, which is a security agent under the loan agreement concluded with a syndicate of international banks. The latter, apart from Raiffeisen, also includes the Austrian UniCredit Bank and CJSC Raiffeisen Bank.

The loan agreement was signed in September 2012. The fact that the group could not cope with the loan repayment became known back in 2016. At that time, Milkiland negotiated restructuring options with creditors. The debt under the loan agreement came to USD 68.42 million and
EUR 0.19 million.


Court rejected claim filed by iPhone users against Google

Google will not pay a fine of GBP 3.3 billion. The High Court of Justice rejected the claim filed by iPhone users for this amount. The applicants insisted that the search engine, despite the privacy settings, collected the personal data of people for targeted advertising.

The plaintiffs reported that Google collected the data of 4 million UK users from August 2011 to February 2012. In their opinion, the corporation bypassed privacy settings on the standard iPhone browser, Safari. The search engine collected information about browsing history and then used it to target advertising, the Associated Press reports.

The first court session on the case took place in May 2018. During the session, the plaintiffs’ attorneys stated that the corporation was collecting information about race, political views, sexual preferences and health of users. The plaintiffs demanded the search engine pay compensation of at least GDP 1 billion. The maximum amount of compensation could be GDP 3.3 billion, but the court rejected the claim filed by users.

At the end of August 2018, a resident of California filed a lawsuit against Google. His dissatisfaction is due to the fact that the search engine stores information about movements of users, even if the corresponding function is disabled in the settings.


Ukreximbank’s claims against Ukrtelecom dismissed

The Supreme Court has dismissed the main claims of state-owned Ukreximbank filed against Ukrtelecom in a case on the redemption of bonds for the sum of UAH 1.1 billion.

As is stated in the declarative part of the ruling, the cassation appeal filed by the State Export-Import Bank of Ukraine should be upheld in part. To recover from PJSC Ukrtelecom the fine of UAH 795,344 and UAH 85,122.00 at 3% per annum for the benefit of Ukreximbank.

The Supreme Court explained its decision, in particular, by the impossibility of recovering the value of bonds from Ukrtelecom as from the company to which proprietary rights to these bonds were not assigned.

A reminder that back in 2015, Ukrtelecom undertook an obligation to redeem the bonds of its parent company ESU (SCM subsidiary) for the amount of UAH 2 billion from two state banks, Oschadbank and Ukreximbank.

But the telecom operator failed to sell its mobile asset, Trimob, and so the company had no funds to cover the bonds. The terms of debt repayment expired back in March 2018.

ESU also failed to pay for bonds issued by the company to finance liabilities arising after Ukrtelecom’s privatization in 2011. Ukreximbank filed a lawsuit against it, demanding recovery of the debt to the sum of UAH 2.8 billion.

On 19 October 2017, on the claim filed by the State Property Fund, the Commercial Court of Kyiv terminated the shares sale and purchase agreement concluded in March 2011 between the largest fixed-line operator, Ukrtelecom, and the company ESU, following the results of the privatization tender, thereby returning the equity stake of Ukrtelecom to state ownership.

The State Property Fund reported that the company ESU failed to carry out its obligations to invest USD 450 million in the company’s development during the period of five years. Therefore, the Fund initiated a lawsuit to terminate the sale and purchase agreement related to Ukrtelecom shares.

By the court ruling, the penalty in the amount of UAH 2.171 billion, accrued for the improper fulfillment of the sale and purchase agreement related to the equity stake in Ukrtelecom, is to be recovered from ESU accounts.

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