Bank Standard Lenders Intend to Challenge Court Decision

Bank Standard lenders intend to challenge the committee's position, approved by the decision of Baku Administrative Economic Court No. 1. According to available information, the court's decision of December 29 last year is hidden, but on the basis of this decision the Azerbaijan Deposit Insurance Fund (ADIF) appointed members of the creditor committee in the process of liquidation of the Bank Standard, having determined the date for convening the first meeting on April 28 of this year.

According to the representative of the interests of a part of the clients of this bank, a member of the Bar Association Akram Hasanov, who spoke to Turan, the convoked committee is illegitimate, since it was not elected at the general meeting of creditors, but was appointed by the Deposit Insurance Fund. "We are going to challenge the decision of the Baku Administrative Economic Court No. 1, but we cannot do it yet, since the court's decision is still not shown to anyone. As a result, it is not known on what basis the Insurance Fund has decided on the composition of the creditor committee."

The expert notes that he applied to the Financial Markets Supervisory Authority (FIMSA) and ADIF, but these bodies refused to present the decision of the Baku Administrative Economic Court No. 1. Hasanov believes that the reason for this is an unlawful court decision authorizing the Deposit Insurance Fund to appoint members of the creditor committee, which is legally an elected body controlling the liquidator's activities in the person of the Deposit Insurance Fund. "It turns out that the Insurance Fund forms an authority that is called upon to monitor its activities. This is nonsense," Hasanov is sure.

Such a decision contradicts Article 50 of the current Law on Insolvency and Bankruptcy, which states that committees are elected at a general meeting of creditors. "Despite the absence of a clear mechanism for creating this body in the Law on Banks, there is a general principle of analogy of legislation. In accordance with Article 1.0.10 of the Constitutional Law "On Regulatory Legal Acts", if some relations are not regulated by a special law, similar legislation is applied. Thus, if the law "On Banks" does not mention this point, we should follow Article 50 "On Insolvency and Bankruptcy," where all issues are regulated," the lawyer said.

It should be noted that Bank Standard ranked second in number of clients after the International Bank of Azerbaijan (IBA). The exact number of creditors has not been disclosed, but it is reported that there are funds of thousands of individuals and legal entities, local and foreign citizens, companies and government agencies. According to the current legislation, in the process of bankruptcy (calculation of the bank's debt obligations), the interests of creditors should be represented by the committee elected by them at the general meeting, it also has the right to access financial documentation and the full powers of supervision over the bankruptcy procedure.

"On an incomprehensible basis, ADIF identified twenty members of the committee, leaving thousands of bank lenders aside. Why they, and not others - we are trying to find out," the expert notes. According to Hasanov, the overwhelming majority of legal entities in the committee of creditors is companies belonging to the public sector, or supervised by FIMSA. Only one company is not related to FIMSA and the state, but its presence explains the size of the bank's liabilities.

The committee includes nine individuals, the National Entrepreneurship Support Fund, the Khazar University, the Public Association Center for the Protection of the Rights of Azerbaijani Youth, as well as Azercell Telecom, SOCAR Cape, SOCAR Marketing, Standard Insurance, GESCO, leasing company Uni Leasing, insurance company Gala Life and non-bank credit organization FINCA Azerbaijan. And though the issue of legitimacy and even the very origin of this composition remain open, this very team will monitor the procedure for repaying the debts of Bank Standard and represent the interests of thousands of creditors.

"The day before, I wrote to FIMSA and the Deposit Insurance Fund about these circumstances in writing, as well as the intention to personally attend the first meeting of the creditors' committee as an observer, as I received credentials from creditors to protect their interests in the process of liquidating this bank. This seems necessary, since the creditors' committee is not elected at the general meeting and, accordingly, will be engaged in the protection of not common, but only of its own interests. Simply put, members of the committee are interested in getting their money back. Hence is the intention of other creditors to challenge the court decision,” said our interlocutor.

He also noted that the committee of creditors of Ganja Bank was elected in a similar way, however, there will be less resonance in connection with liquidation of this financial institution, due to a small number of the bank’s creditors. The first meetings of creditors' committees created in the process of bankruptcy of Bank Standard and OJSC Ganja Bank will be held on April 28 and May 5, respectively. The Azerbaijan Deposit Insurance Fund announced the composition of the committees and sent written notifications to their members. -0 -----