Sergey Bakeshin has represented the interests of the Trust bank in the St Petersburg City Court

On 14 June, the St Petersburg City Court reached a decision in favour of Maxima Legal’s client, Trust bank, in respect of a dispute concerning credit notes.

On hearing the appeal of the bank, the court overturned an earlier decision of Oktyabrisky regional court, which had been in favour of the holder of credit notes, and declined in full the claimant’s attempt to recover all money spent on the purchase of credit notes.

The case concerned securities issued by a foreign company that had entered subordinated loans with the bank.  The credit notes could only be acquired by qualified investors, who understood the risks associated with investing in such a tool, which includes the possibility of complete loss of invested funds.  A feature of subordinated loans is that in the event of a threat of bankruptcy to a bank that has received such a loan, it is written off in order to ensure that the bank’s obligations to depositors and other customers can be discharged.

Such an event happened in December 2014.  Guided by the provisions of the contracts, as well as Russian legislation, the bank wrote off subordinated loans, which led to the cancellation of the derivatives of the credit notes. The holders of credit notes subsequently applied to the courts, citing that they did not appreciate the difference between foreign securities and bank deposit and insisting that they had been misled, believing that they money had been held on deposit.

Initially, not having understood the full circumstances of the cases, courts, including in St. Petersburg, often took the side of the holders of credit notes. These court decisions were referred to by many credit note holders in different regions of Russia.  However, judicial practice in such disputes has now changed to favour of the bank’s arguments.

In February of this year, Senior Associate at Maxima Legal, Natalia Demina, successfully changed the practice of the St Petersburg City Court and won a dispute involving the Trust bank against Mr Vibornov, who disputed being considered a qualified investor, but did not claim for the funds spent on the purchase of the credit notes.

Head of the Dispute Resolution Practice at Maxima Legal, Sergey Bakeshin, successfully represented the bank in a further dispute with the holders of credit notes, strengthening the position of the Trust bank and deprives the holders of credit notes if the opportunity to make further claims against the bank.