"Paper" debt of 4.7 billion: How delayed justice is destroying Ukraine’s economy
On 27 July, the Eastern Commercial Court of Appeal in Kharkiv will once again hear an appeal filed by Poltava Mining and Processing Plant PJSC against the ruling to open bankruptcy proceedings against it. Formally, the hearing concerns merely a single ruling by the court of first instance. In reality, it will test whether, during wartime, what remains of Ukraine’s investment climate and a strategic enterprise can be destroyed over a debt whose very existence is denied by the Supreme Court itself.
Poltava Mining and Processing Plant (Poltava MPP) is one of Ukraine’s largest producers of iron ore products and an asset of the publicly traded company Ferrexpo, whose shares are listed on the Main Market of the London Stock Exchange. More than half of Ferrexpo’s shares are held by foreign institutional investors, ranging from BlackRock to pension and index funds. It is effectively the only company with Ukrainian industrial assets to have successfully listed its shares on major international financial markets. It has now found itself at the centre of a case increasingly being described as a test of the fairness of Ukraine’s judicial system.
How a nonexistent debt arose
The story began in 2014–2015, when Finance and Credit Bank ran into financial difficulties because of the war, the incompetence of national financial regulators and the devaluation of the hryvnia. In August 2015, the bank debited funds from Poltava MPP’s accounts to repay loan debts owed by other borrowers. In the autumn of that year, the bank was nevertheless declared insolvent and subsequently liquidated.
Poltava MPP challenged the debiting of the funds in court, and in June 2022, the Supreme Court issued a final ruling: the funds had been lawfully and irrevocably debited, making it impossible to return them and, consequently, to reinstate the debt.
However, back in July 2019, while a ruling in favour of Poltava MPP was temporarily in effect in the case under appeal, the liquidator of Finance and Credit Bank unilaterally reversed the 2015 debit transactions and "reinstated" the borrowers’ debt solely through an accounting entry – a reversal. When the ruling in favour of the MPP was overturned several months later, the liquidator did not cancel the entry based on that overturned court ruling. As a result, a debt that had been repaid back in 2015 continued to remain on the bank’s balance sheet.
It was this "paper" and nonexistent debt that, in November 2020, after the Supreme Court had ruled on 31 October 2019 that no debt existed, the Deposit Guarantee Fund sold as part of a pool of the bank’s assets, at a discount of about 99%, to Maxi Capital Group. The buyer paid approximately UAH 85.6 million for claims that, with interest, had grown to billions of hryvnias. At the same time, Ferrexpo and Poltava MPP were confident that no debt existed on the basis of the ruling by the Supreme Court of Ukraine of 31 October 2019. Otherwise, they would have participated in the auction and acquired those claims for more than the amount offered, rather than expose themselves to the risk of potential future lawsuits worth several billion hryvnias.
What the Supreme Court said
In early 2023, a lawsuit was filed with the Commercial Court of Poltava Region; subsequently, the appellate court in Kharkiv granted the claims in the lawsuit at a hearing that lasted only one hour, effectively recognising the existence of debts worth billions of hryvnias that had arisen solely on the basis of an overturned court ruling and unlawful amendments made to the accounting records of Finance and Credit Bank JSC in 2019.
However, in June 2024, a panel of judges of the Commercial Cassation Court within the Supreme Court reached a different conclusion. The judges confirmed that the funds debited from Poltava MPP’s accounts in 2015 towards repayment of the debt had been lawful and were not open to question. Therefore, when the debt was sold to Maxi Capital Group in November 2020, it no longer existed. As the Supreme Court noted, a reversal is an accounting transaction and cannot create any obligations.
Because of inconsistencies in judicial practice, the case was referred to the Joint Chamber of the Commercial Cassation Court, which declined to consider it in March 2026, leaving the final decision to the panel of judges. Proceedings before the Supreme Court have now continued for a third year, unlike those before the Eastern Commercial Court of Appeal in Kharkiv, which handed down this complex decision worth billions of hryvnias in just one hour. Until the Supreme Court proceedings are concluded, the dispute over the right at issue legally precludes the opening of bankruptcy proceedings.
Who is behind ‘Maxi Capital Group’?
Among the company’s beneficial owners is Leonid Kriuchkov, who stood as a parliamentary candidate in 2019 on the party list of Viktor Medvedchuk’s now-banned pro-Russian Opposition Platform — For Life party (OPFL). His brother, former MP Dmytro Kriuchkov, was sentenced by the High Anti-Corruption Court to 15 years in prison for embezzling more than UAH 1.5 billion from state-owned regional electricity distribution companies and is currently hiding abroad.
The insolvency practitioner whom the creditor company itself proposed appointing as administrator of Poltava MPP’s assets is Dmytro Kucheriavyi. According to available information, he is linked to entities that previously serviced the assets of sanctioned businessman Pavlo Fuks, whose scheme involved acquiring distressed debts owed by Ukrainian industrial enterprises from failed banks, subsequently paralysing those enterprises, driving them into bankruptcy and effectively destroying them.
Timeline of the bankruptcy case
The Commercial Court of Poltava Region received the application to open bankruptcy proceedings against Poltava MPP on 14 May 2025. The law allowed 20 days for its consideration, but Judge O. O. Orekhovska took 284 days to issue a decision and opened the proceedings only on 24 February 2026, without effectively waiting for the Supreme Court to resolve the dispute between Maxi Capital Group LLC and Poltava MPP over the nonexistent debt. Dmytro Kucheriavyi was the person appointed as the asset administrator.
On appeal, the first panel of judges (R. A. Hetman, O. I. Skliaruk and V. S. Khachatrian) opened proceedings on 11 March 2026 but recused itself on 30 April following the publication of a media report about a potential conflict of interest in the case. On 5 May, the case was assigned to a new panel comprising I. A. Shutenko, N. V. Hrebeniuk and M. M. Slobodin. It is this panel that will hear the appeal on 27 July. The delay in considering Poltava MPP’s appeal prolongs bankruptcy proceedings that are essentially unlawful and harms a strategic Ukrainian enterprise, its investors and business partners, as well as what remains of Ukraine’s investment climate.
What the case is costing the enterprise and its investors
The consequences for the plant and its shareholders are already tangible. On 24 February, the day the Commercial Court of Poltava Region opened bankruptcy proceedings against Poltava MPP, Ferrexpo shares fell by more than 20% in a single trading session on the London Stock Exchange. As a result of the fall in the share price, the company’s investors lost more than $100 million in just one day of trading.
Because of this court ruling, the enterprise has been forced to make provisions for the full amount of the claims, UAH 4.727 billion, resulting in losses of more than UAH 3 billion. Following the opening of bankruptcy proceedings, the enterprise became subject to restrictions prohibiting Poltava MPP’s governing bodies from adopting decisions on reorganisation, dividend payments, or the provision of collateral or loans; without the consent of the asset administrator, the company cannot even lease out property or satisfy the claims of current creditors. The moratorium on satisfying creditors’ claims makes timely settlements with counterparties impossible; some are already demanding advance payment, further worsening the enterprise’s financial position. As a result, business relationships and processes have been severely disrupted; the enterprise is losing trusted counterparties, while potential new ones are refusing to cooperate because of the ongoing bankruptcy proceedings.
According to preliminary estimates, the state budget will lose nearly UAH 1 billion because of reduced tax revenues. Poltava MPP urgently needs an additional $100 million in investment to sustain production, but no lender is prepared to invest in an enterprise undergoing bankruptcy proceedings and subject to a moratorium on payments.
Staff losses are also substantial: while Poltava MPP employed more than 5,500 people at the end of 2022, it now employs 3,500 (including 800 serving in the Armed Forces of Ukraine), and operates only three to four days a week. Around 5% of its personnel are now engaged exclusively in administering the bankruptcy proceedings, communicating with the asset administrator and creditors, rather than performing their core duties.
What will be decided on 27 July?
Formally, the matter concerns the review of a single ruling by the court of first instance. In substance, however, the appellate court must answer whether bankruptcy proceedings against a strategic enterprise can be opened in Ukraine on the basis of a nonexistent debt.
A ruling in favour of Poltava MPP would allow it to continue operating under the difficult conditions of wartime, while an adverse ruling would, by contrast, confirm that a "paper" debt bought for next to nothing and an insolvency practitioner controlled by the creditor can paralyse a strategic enterprise even during wartime.
It is crucial, however, that a decision of some kind ultimately be delivered. Further delay would mean that access to justice in Ukraine, through an appeal against any appellate court ruling to the Supreme Court of Ukraine, remains impossible. In this situation, justice delayed amounts to no justice at all.
For the hundreds of foreign institutional investors holding Ferrexpo shares, the ruling will serve as a direct indicator of whether investing in Ukraine’s economy is worthwhile at all and whether such investments are protected from corporate-raiding schemes disguised as ordinary commercial disputes.
