The court  released the bankrupt bank debtors from foreclosure liens

   The Supreme Court of Ukraine       (Chamber of Civil Affairs ) determined  that in the event of bankruptcy and liquidation of the borrower   collateral and mortgages agreements are also deemed to be terminated,  that is, borrower   who can not pay to banks for loans and started  procedure of  bankruptcy should  be exempted from  giving to bank  their  collaterals(Decision of 11 September 2013 )

 The Court came into such conclusion in the case between

"Raiffeisen Bank Aval " and  the individual , who was  guarantor  of the borrower  who took  loan  -      company  "Mickom- House"  (amount  of loan  was 7 million $,  for term -18 months).  The guarantor of the borrower gave  to the Bank  collateral property belonging to him .  After the breach of payment terms  by the borrower   Bank asked the court for foreclosure on the mortgage .  But  at this time  "Mickom- House"  was declared bankrupt and liquidated .

Court in Kiev rejected requirements of both parties, referring to the law " On mortgage " and Article 609 of the Civil Code, according to which the mortgage contract is terminated in connection with the liquidation of the legal entity .

      However, the Kyiv Appeal Court stated  that the Bank has the right to demand  the mortgage in the event of liquidation of the borrower.

      As a result, the Supreme Court decides  that in the event of liquidation of the debtor  his  liens are alsodeemed to be terminated. According to Art . 17 of the law " On mortgage "  mortgage stops in the event of  termination a primary obligation.

      Therefore, the mortgaged property remains the property of the guarantor.

    So such interpretation of law by the Supreme Court  might initiate a new wave of recognition of collateral agreements invalid.