Vice Chancellor Joseph R. Slights III approved a stipulated order Thursday that will give counsel for PrivatBank an extra month to file a brief in the case, with parties in the litigation also agreeing "to meet and confer in good faith regarding whether developments in Ukraine warrant reasonable changes to this schedule."
Counsel representing litigation parties agreed to extend a deadline from March 21 until April 20 for PrivatBank's counsel to file a response to a filing last month from Ukrainian-born oligarchs Gennadiy Borisovich Bogolyubov and Igor Valeryevich Kolomoisky, along with other defendants in the suit.
The filing asserted that PrivatBank's claims related to certain loans at issue in the suit should be tossed because they are precluded by factual findings already made by Ukrainian courts.
The bank's "representatives who are directing and involved with the prosecution of this action are currently located in Kyiv and other parts of Ukraine in which armed conflict is currently occurring," the order said.
"In consideration of the armed conflict in Ukraine, the parties have agreed on an extension of the deadlines set forth" under a prior briefing schedule, the order said. Under the newly revised schedule, once PrivatBank files its response to last month's filing, counsel for the oligarchs will have 21 days to make a reply.
In August, Vice Chancellor Slights largely paused claims in the more-than-two-year-old case pending developments in actions in Ukraine. The vice chancellor said that moving forward in Delaware would oblige the Chancery Court to adjudicate "issues of Ukrainian law at the same time those issues are being litigated before judges expert in that law."
"The risk of inconsistent judgments is high," the vice chancellor said in the decision, noting that some procedural matters would continue to move forward should events call for a resumption of litigation in Delaware.
PrivatBank sued Kolomoisky and Bogolyubov in mid-2019, seeking some $660 million in damages tied to the billionaires' alleged conduct.
Also named were three "agents" of the alleged scheme — Mordechai Korf, Chaim Schochet and Uriel Tzvi Laber — along with 20 Delaware-chartered corporations and limited liability companies. Those involved, the complaint said, directed borrowing from the Ukrainian bank and then moved the money through accounts in Ukraine, Cyprus and beyond, using Delaware-chartered shell companies to buy up factories and commercial real estate around the United States.
"While the actions of the Delaware entities are part of that story, they constitute the ultimate (or perhaps penultimate) chapter; as the complaint makes clear, the story begins in Ukraine, and that is where much of the proof will reside," the vice chancellor said in his August ruling.
Ukrainian law will likely apply to many of PrivatBank's claims, the vice chancellor found, noting that a past decision in Delaware already had concluded that Ukraine's civil code had no direct counterpart to Delaware's unjust enrichment and fraudulent transfer laws.
Some briefing on "certain predicate matters" would continue to move forward in Delaware, the vice chancellor said, with the court reassessing the stay "'upon adjudication of those threshold issues if it is evident the relevant Ukrainian actions are not moving with sufficient speed."
PrivatBank and its borrowers have been battling in Ukraine over debts and repayments, including 56 of 75 loans at issue in the Chancery Court case, according to the ruling.
Also pending is multivenue litigation associated with the nationalization of PrivatBank and ousting of Kolomoisky and Bogolyubov as owners.
The Chancery Court suit asserted Kolomoisky was "widely reported as being the principal power and financial backer" of Ukrainian President Volodymyr Zelensky, citing press reports that speculated there was a deal between the two in which Zelensky, in exchange for the billionaire's support, would "ensure the return of PrivatBank to the ownership of Mr. Kolomoisky in order to circumvent any pending or threatened litigation against Kolomoisky."
In its complaint, PrivatBank claimed billions in losses overall. It also indicated that it would pursue alter-ego liability and corporate veil-piercing claims in the Delaware case, in pursuit of claims of unjust enrichment, civil conspiracy, state fraudulent transfer and violations of Ohio's racketeer influenced and corrupt organizations statute.
PrivatBank accused Kolomoisky and Bogolyubov of plundering its assets between 2006 and 2016, the year of its nationalization, saying the pair attempted asset sales and other transactions aimed at moving proceeds of the alleged fraud beyond the bank's reach.
Funds from the alleged scheme were said to have turned up around the United States, including in Ohio, where cash was used to buy up a 22-floor office building in Cleveland.
Kolomoisky separately filed a defamation suit against PrivatBank and others in Ukraine, while PrivatBank sued Kolomoisky and Bogolyubov and six companies incorporated in the U.K. or British Virgin Islands for unjust enrichment. Actions involving the PrivatBank claims were also filed in Israel, Cyprus and Switzerland.
In last month's filing, defendants in the Delaware suit argued that although certain actions "continue to make their way through the Ukrainian courts," certain factual findings already made in Ukraine "are binding on PrivatBank here [in the Chancery case] and preclude it from relitigating the same facts respecting the same loans in this action."
"Delaware follows the issue-preclusion rules of the forum that rendered the findings at issue — here, Ukraine," the filing said.
Counsel for the parties did not immediately respond to a request for comment.
Joint Stock Commercial Bank PrivatBank is represented by Michael A. Barlow and Eric A. Veres of Abrams & Bayliss LLP, and William A. Burck, Alexander J. Merton and Rollo C. Baker of Quinn Emanuel Urquhart & Sullivan LLP.
Igor Valeryevich Kolomoisky is represented by Kenneth J. Nachbar, Megan Ward Cascio and Miranda N. Gilbert of Morris Nichols Arsht & Tunnell LLP.
Gennadiy Borisovich Bogolyubov is represented by Albert H. Manwaring IV and Albert J. Carroll of Morris James LLP, and Dane H. Butswinkas, David S. Blatt and Matthew B. Nicholson of Williams & Connolly LLP.
Mordechai Korf, Chaim Schochet, Uriel Tzvi Laber and affiliates are represented by Raymond J. DiCamillo and Daniel E. Kaprow of Richards Layton & Finger PA, and Marc E. Kasowitz, Daniel R. Benson, Mark P. Ressler, Sarmad M. Khojasteh and Joshua Paul of Kasowitz Benson Torres LLP.
The case is Joint Stock Commercial Bank PrivatBank v. Kolomoisky et al., case number 2019-0377, in the Court of Chancery of the State of Delaware.
--Additional reporting by Jeff Montgomery and Najiyya Budaly. Editing by Gemma Horowitz.
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