Int’l Bank of Azerbaijan comments on decision of London Court of Appeal

13:29 - 21.12.2018


December 21, Fineko/abc.az. The International Bank of Azerbaijan (IBA) has commented on the decision of the London Court of appeal dated 18 December 2018 on the refusal to establish in the UK an indefinite moratorium on foreign creditors’ claims concerning IBA’s assets.

The Bank comments that the decision taken on the complaint of IBA’s two foreign creditors says that the process of voluntary restructuring of the Bank's liabilities was recognized in the UK by first instance court’s decision from 6 June 2017.

"This decision is still in force. The decision of the London Court of Appeal from 18 December 2018 was quite expected. First instance court’s decision from early 2018 says that the issue of application or non-application of the Gibbs law in respect to processes of cross-border bankruptcy and insolvency belongs to the jurisdiction of the Supreme Court," the IBA’s commentary says.

The judge also confirmed in the last decision of the Court of Appeal that he was not authorized to declare an indefinite moratorium on any actions by creditors in respect of IBA’s assets in the UK, as Gibbs Law in the UK is binding on both the courts of first instance and the courts of appeal.

"This final decision of the London Court of Appeal has no cross-border implications and is valid only in the UK. The Bank will use the right to appeal the decision of the London Court of Appeal in the Supreme Court of Great Britain," the IBA comments.

Savings Bank and Franklin Tempelton can use the right to file a claim against the IBA on restructured debt liabilities, but they are deprived of the opportunity to obtain a court decision taken within the framework of the relevant judicial process and send it for execution. Court of Appeal’s decision from 18 December 2018 says that the restriction would remain in force until the Supreme Court rules on the matter.

The statement also says that the information disseminated in a number of media is not true. According to the London Court of Appeal’s decision, Savings Bank and Franklin Templeton are not entitled to recover the debt from the IBA. To be eligible for that, the lenders must await the decision of the Supreme Court and in case of victory, to file a separate lawsuit.

The rights of two creditors who opposed the Bank's restructuring plan in the UK are secured by securities issued by the Ministry of Finance of Azerbaijan. This in turn protects the Bank from future risks on these claims.

According to the restructuring plan, the Savings Bank was offered securities worth $16 million on the $20 million loan agreement. As a result, Savings bank’s claim for the principal amount to the IBA is only $4 million. It should be noted that the liabilities to Savings Bank and Franklin Templeton, which do not accept the restructuring plan, make up only 5% of the total amount of IBA’s restructured liabilities.

 

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