Financial company ICU released "hostages" but may sue Ukraine with GLAS's help

As reported by journalist Serhiy Lyamets, ICU offered LPN owners to exchange their papers for their own — already restructured, in other tranches — which is a real breakthrough in the deadlocked confrontation that lasted for months. The author calls this step a "gentleman's act" and compares it to "releasing hostages." He does not rule out Petro Poroshenko's influence on ICU's decision.

Loan Participation Notes (LPN) are special debt instruments that were used, in particular, to raise funds from VIP clients of "Alfa-Bank" before the full-scale invasion. They were issued through the Dutch company EMIS Finance B.V. to protect investors from the legal risks of Ukrainian jurisdiction. Funds raised through LPNs were directed back to Ukraine for lending, and depositors received profits in foreign currency. After the bank's nationalization, LPN payments were frozen, and the owners of these papers found themselves in a state of legal uncertainty. Most tranches were restructured, but bondholders of two tranches were blocked due to ICU's unwillingness — the author calls them "hostages."

According to the author, behind ICU's good deed, there is probably a pragmatic calculation: ICU is looking for ways to return its funds, and for this purpose, it involves a notoriously known structure — Global Loan Agency Services Ltd (GLAS). It is GLAS that can become the new "trustee" instead of the neutral BNY Mellon. GLAS specializes in conflicts and acts in the interests of the client.

As Lyamets' sources suggest, ICU is preparing a lawsuit against Ukraine — with a demand to compensate for losses related to the nationalization of "Alfa-Bank." This means that a company with Ukrainian roots will effectively go against the state in international jurisdiction. International companies GLAS and Cleary Gottlieb may help it in this.

In such a scenario, ICU may face significant reputational losses, or even personal sanctions — both in Ukraine and in the EU or Great Britain. The risks are further amplified by the fact that Cleary Gottlieb, the company that once created the agreement with the so-called Yaresko warrants (instruments that provide for hundreds of millions of payments from the Ukrainian budget with high GDP growth), acts as ICU's legal partner.

The situation raises serious questions:

Is it ethical for a Ukrainian company to sue its own country, which is in a state of war?

Do ICU's partners — particularly GLAS — realize the reputational consequences of their actions?

The author reminds: sanctions are not always about facts, sometimes it's just about the decision to give these facts a course. In case of filing a lawsuit against Ukraine, ICU may lose more than it hopes to gain. However, for now, there are no signs of such a scenario, and ICU's action is "gentlemanly."