Case study “Gulliver”: Problem debtors and trust issues

The seizure of the Gulliver commercial and office complex (COC) by a consortium of state-owned banks (Oschadbank, 80% stake; Ukreximbank, 20% stake) received significant public attention not only because of the temporary shutdown of the complex but also because of the previous owner's active resistance to the consortium's legal rights. The logic behind the state banks' actions in this case is quite simple: the debtor ceased cooperation with the banks, lost their trust, and left them with no choice but to foreclose on the mortgage. Let's take a look at the main events that led to this decision. I think this article will be a useful guide to the relationship between banks and customers.      

The loan for the construction of a commercial and office complex was obtained back in 2006. Construction took a very long time, the company changed shareholders and management, the architectural and business concept changed, and the complex was only put into operation in 2014, which inevitably affected the initial poor financial condition of the business case. In addition, virtually the entire loan was issued in foreign currency, which was not surprising at the time and reflected the state of risk management across the entire banking system. Incidentally, the same attitude to risk (albeit in slightly different forms) prevailed not only in Ukraine but also in most developed countries around the world. Let us recall the mortgage crisis in the US and European countries in 2008.

To save Ukrainian businesses from the effects of the 2014 crisis, the Ukrainian Parliament passed a law on financial restructuring. It was developed at the initiative of the IMF, with representatives of the EBRD and the World Bank participating in its development. The law provided for the relaxation of requirements for borrowers experiencing financial difficulties in terms of interest rates, loan repayment terms, partial debt forgiveness, etc. 

After the 2014 crisis, as a result of devaluation, COC Gulliver's credit debt tripled, but, as Rotschild and KMPG pointed out in their reports, the debtor company's financial model still allowed it to repay the entire debt and accumulated interest, albeit over a very long period. At the same time, this model was more economically attractive to banks than foreclosure.   

After careful preparation, the loan was restructured in 2020. The decision was based on the main conclusions of the above-mentioned financial experts, approved by the collegial bodies of both state banks, including their supervisory boards, and approved by the Financial Stability Council.    

An important aspect for the future development of events was the fact that during the restructuring, the old contractual base (mortgages, etc.) was brought into compliance with the requirements of the current legislation, which significantly strengthened the position of banks. V.S. Polishchuk's personal surety was also issued under Ukrainian law and under English law (with the rule on dispute resolution in the London Court of Arbitration, to reduce creditors' legal risks). One of the critical elements of the restructuring was that banks properly described all the building's belongings in the mortgage, because the practice still prevails in Ukraine when debtors block foreclosure by separating important elements of the collateral infrastructure (for example, hiding from the creditor and registering equipment, power substations, water supply elements, computer engineering, etc. for other persons). 

From the time the financial restructuring plan was concluded until the start of the full-scale war, the borrower complied with the terms of the restructuring. But the war made its adjustments. In the first phase of the great war, the flow of funds fell 20 times, the office part was empty, and only a grocery supermarket and a pharmacy worked in the trade. Thus, Gulliver's previous financial model faced the risk of non-fulfillment.

A gradual recovery of activities began from the end of 2022, but was still very far from the expected pre-war financial flows. In addition, there was a devaluation again, which increased the currency part of the debt. Also affected by the war were two other related business subgroups–logistics business (a key asset destroyed by a missile) and the El Dorado trade network (brought some losses during the war and could not withstand the competition). The last two problem loans are also a consequence of general banking policies until 2014. It should be noted that these policies led to the so-called bank crash, because some banks were too enthusiastic about the concentration of portfolios on narrow groups of borrowers. 

In the period 2022-2024, the debtor constantly raised issues regarding the need for additional financing of the affected businesses, in particular, the reconstruction of the destroyed refrigerated warehouse. However, diametrically opposed business interests collided in this matter. Oschadbank had a very large exposure to this problem group, and its expansion (even for the understandable purpose of rebuilding the affected warehouse) would be an extremely risky investment. It was much more efficient and safer to develop SME finance and diversify risks. Ukreximbank had no relation to the warehouse at all, and its interest, taking into account the state of capital, was reduced only to the earliest repayment of the loan issued to Gulliver. Therefore, these requests ended with the fact that the debtor was offered to raise funds for recovery in another way.  

However, in 2023, banks managed to reach an agreement with the debtor at the level of working groups to resume payments in accordance with pre-war financial models, but in proportion to war losses. For some time, the client followed these agreements. As of the beginning of 2024, a project for a short restructuring of Gulliver's debt was prepared at the level of working groups, which provided for the resumption of full payments for financial restructuring and the settlement of the debt of the first stage of the full-scale war. After paying off the debt for Gulliver, the debtor expressed his intention to repay the debt of the bankrupt Eldorado and the affected warehouse business.

However, the debtor's words and affairs differed.      

In the spring of 2024, on the initiative of law enforcement agencies, the Shevchenkivsky District Court of Kyiv decided to arrest Gulliver as part of an old criminal case against officials of LLC ‘THREE О” regarding tax evasion in the amount of approximately 150 million hryvnias, and an account in Oschadbank was also seized. Already in June, the court decided to transfer the building to the management of ARMA.

For a consortium of banks, such an event meant only one thing: from the moment the building (the subject of the mortgage) is actually transferred to the management, the source of loan repayment will disappear, because the manager will not have any obligations to state banks. Perhaps this is surprising to readers, but Ukrainian legislation is just that.   

In parallel, from June 2024, the debtor began to reduce the number of payments to banks until the complete termination of debt service. In justification of his actions, he said that he needed to repay the tax debt and that this would stop the seizure and management of ARMA. At the same time, for the confidence of the consortium in the future, he proposed a voluntary, without courts, transfer of ownership of the building to mortgage-holding banks with subsequent financial leasing of the building.

Against the background of previous difficult negotiations and requests regarding the priority of rebuilding the warehouse, the termination of payments by the debtor was perceived by banks as a undermining of trust. However, given his promise to transfer the building to banks without courts to repay the debt, the banks agreed to the condition that the debtor would be able to collect the necessary funds to repay the tax debt within about three months and close the criminal case.

A key event that changed everything: in October-November 2024 the debtor did not resume payments without providing any reasonable explanation. The debtor never paid for the mentioned loans again. 

In addition, it became clear that the competition for the selection of a manager by ARMA was a long-lasted procedure during which the debtor continued to manage the business and, according to the calculations of the financial model, could continue to service debts to banks.

It also became known that the debtor is quite actively carrying out construction activities related to the restoration of the destroyed warehouse. This was seen by the banks as a disregard for the agreements reached, because the available cash flow was not directed to repaying debt obligations.

The described actions of the debtor became the reason that, in compliance with resolution №97 of the NBU, he was recognized as not cooperating with the banks. In accordance with the regulatory acts of the NBU regarding work with problem debt, such a judgment of the bank leads to a change in strategy in working with the client; the only strategy is the so-called liquidation of the financial asset, and in simple words–debt collection and collateral. Relevant requirements, official appeals, preparation of an independent appraiser's report, collection and preparation of other documents for the implementation of the liquidation scenario were prepared and submitted.

It is clear that the goal of the bank in such a scenario is to receive funds as quickly as possible. As mentioned above, the contractual framework finalized in 2020 made it possible to use the fastest tool available to the mortgagee quite effectively–to collect the mortgage by registering ownership of it with the state registrar. Of course, this is also preceded by a rather complicated procedure that includes an assessment (it was made by one of the very respected appraisers, the company “Deloitte”), as well as proper notification of the debtor. Some time was spent on compliance with the formalities established by V.S Polishchuk.'s guarantee under English law.

Criticism was expressed in the press by the debtor's lawyers and the “hype-eaters” who joined them in the “that the banks did not agree to the preventive restructuring plan.” This procedure was initiated in the commercial court by the debtor himself, and the preventive restructuring plan submitted by him mainly reflected the content of the 2024 negotiations, the agreements according to which he himself did not fulfill. However, all these commentators hide one detail, which, of course, I don't want to talk about: the debtor crossed the Rubicon at the end of 2024, when he stopped paying and continued not to pay even further despite the fact that he had the financial capacity.

Banks had no reason to believe the debtor that he would do what he didn't do in 2024 in 2025, although he had every opportunity. Total breakdown of trust and disregard for the financial interests of banks- that is exactly what predicted lead to the recovery of the debtor's property.

Consequently, the proposed preventive restructuring was assessed by the banks only as an element of the legal strategy for debtor protection with the sole aim of delaying the collateral collection process as long as possible.

Another rather interesting element of the debtor's legal strategy was the reference to the fact that V.S. Polishchuk has been a sanctioned person since the spring of 2025. Why this status should have given the debtor an indulgence in debt repayment (especially to state banks), remains a secret.         

On July 26, 2025, despite legal resistance from the debtor, Oschadbank and Ukreximbank registered ownership of the Gulliver COC.

As a result of foreclosure on the mortgage in accordance with the law, all lease agreements have been terminated, because this guarantees the protection of the interests of the mortgagee from unfair lease agreements that the debtor could conclude. In this regard, the banks have offered tenants to enter into new leases directly with them on the same terms. Only structural subdivisions that were related to the debtor were asked to leave the building. 

The banks also immediately began concluding contracts for the maintenance of the building with all utilities and contracting organizations. 

The debtor was asked to properly transfer the building to the banks and the relevant management team in a civilized manner and with respect to the tenants. The staff of LLC “THREE О” was offered to stay at work under the same conditions. It should be noted that the building is an extremely complex object. In fact, it is a large “smart home”, so the banks tried to act as carefully as possible so that the transfer of the building did not cause discomfort to tenants and visitors.

Unfortunately, the debtor's further actions did not look civilized at all. Access to building engineering, most technical facilities, passwords to systems, etc. was restricted to bank contractors and the hired management team by means of a computerized control system.

In October, thanks to the activities of the debtor and his team, the building ran the risk of an emergency situation, which the consortium of banks could not prevent. This left owner banks with no choice but to make a decision to temporarily suspend Gulliver to ensure the safety of tenants and visitors.

In the official press releases of Oschadbank, we noted that during the entrance to the facility of the bank's management team, the police and the emergency service, the debtor's personnel ran away. A subsequent audit found that valuable equipment providing its operations had disappeared from the site, some of the equipment had been destroyed, passwords had not been transmitted, computerized access systems had been monitored from outside for some time, etc.

It is clear that all the events described above are the subject of appeals by the state banks to law enforcement agencies, the guilty persons will be held responsible for the damages.

With all the banks' desire to resume operations as soon as possible, the condition of the equipment and the damage caused to the building turned out to be significant. The banks have decided to resume activities gradually, currently a decision has been made to resume the activities of the first floors of the COC, the office part is preparing for opening. We hope that the rest of the floors of the complex will also be operational soon (as of 12/16/25).      

Of course, the banks have simultaneously immersed themselves in legal proceedings to collect the remaining debts from the guarantor, as well as in proceedings related to the bankruptcy of LLC “THREE O”.    

With respect to the management strategy, for the consortium of banks, the building is a sellable investment asset (we plan to start marketing from the moment the building is fully operational) and the current activity is non-core.  However, given that the debtor was actively resisting both legally and technically, finding an external manager of the building by the time of sale appeared to be a clearly ineffective strategy, as an effective and reputable manager needed a “cleaned” facility. Holding an international competition, demonstrating the facility, technical parameters, performance indicators and following up the manager's activities in conditions where the building was actually blocked by outsiders would be highly ineffective solutions. Therefore, the banks chose a complicated, but the only possible scenario for the first time after obtaining ownership –independent management of the facility, forming a special center in the staff of Oschadbank. The center is formed from highly qualified real estate market professionals. 

From a commercial point of view, banks continue to conclude lease agreements with tenants on the terms that were in effect before the collection. The main exception is that the lessee should not be associated with the debtor, nor with the aggressor state. If the space concerned is released for these reasons or if the tenant chooses to leave the building, the management center receives from the market commercial offers from potential tenants. These proposals are analyzed by the credit risk department (a unit controlled by the supervisory board of Oschadbank) for market compliance. At the same time, the goal is to fill the areas the fastest and improve the financial conditions compared to those provided by the previous owner, or at least to leave the status quo.

To summarize this long history, I must say that Oschadbank and Ukreximbank acted as discreetly as possible, were guided by economic expediency, followed the best practices in working with NPLs and regulatory acts of the NBU, and sought the most effective way out of the extremely difficult financial situation not only for themselves, but also for the debtor. All the tools provided by law for debt restructuring were used (which, by the way, made it possible to improve the health of other businesses that cooperated responsibly with the bank). However, when trust is lost and the debtor is non-cooperating, there is only one way out.

Source https://epravda.com.ua/experts/case-study-guliver-problemni-borzhniki-i-problemi-doviri-815551/