CEE Legal Matters

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  • Latvia: Third-Party Assets Held by a Credit Institution in Cases of Insolvency

    A credit institution typically possesses funds belonging to depositors. However, there may be situations when the institution also holds property that belongs to third parties. This article aims to examine the concept of third-party property in the case of a credit institution’s insolvency.

    Pursuant to the Credit Institutions Law, the list of properties of a credit institution shall include deposits and interest on deposits but shall not include other properties belonging to third parties that are held by the credit institution.

    First, it is necessary to define the term “holding.” “Holding” implies having actual power over an asset that is owned by another.

    The Credit Institutions Law does not provide a legal definition of the term “third party.” It does stipulate that a “creditor” is a person bound by a contract that has a claim against a credit institution. A third party also has a claim against a credit institution, so that characteristic is not decisive in determining whether a person is a third party or not.

    Furthermore, in accordance with the Credit Institutions Law, a “customer” is a person to whom a credit institution provides financial services. Consequently, we can presume that a third party is a person to whom the credit institution does not provide financial services.

    The Senate of the Republic of Latvia in the decision of March 29, 2019, in case No. SPC–3/2019 has indicated that: “In order for the balance of funds in the client’s account to be included in the credit institution’s assets [..] it is insufficient to establish the account balance on the day of [the] insolvency application. It is also necessary to make sure that the funds are not the property of a third party, especially in a situation where the customer of a credit institution indicates in the application to the administrator the circumstances due to which it considers that the funds should be recognized as the property of a third party.”

    Consequently, the credit institution is obliged to make sure the funds are not considered to be the property of a third party.

    The Financial and Capital Market Commission (FCMC) considers that the concept of a “property owned by third parties and held by the credit institution” is to be interpreted narrowly. As such, the provision in question does not provide for the inclusion of funds that are in the possession of the credit institution and not in holding and are reflected in the balance sheet of the credit institution – i.e., the credit institution is entitled to use them.

    The FCMC explains that property owned by third parties and held by a credit institution is considered to be funds that, in accordance with the concluded agreement, are kept separately by credit institutions from other property of the credit institution.

    This raises one question: if a credit institution has terminated its business relationship with a person but the funds remain with the credit institution, should that person be regarded as a “creditor” or a “third party”? To answer this, it is essential to examine and clarify the legal and practical implications that result from a credit institution’s termination of its business relationship with a client.

    According to the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing of Latvia, a credit institution has the right to terminate business relations with a client on its own initiative by closing the relevant client accounts and transferring the funds to the same person’s account in another credit institution. Thus, upon termination of the business relationship, the credit institution is no longer entitled to provide any financial services to the person, and the credit institution is obliged by law to transfer the funds.

    It can be concluded that in cases where a credit institution has terminated its business relationship with an individual and subsequently becomes insolvent, the funds belonging to the individual are considered assets of a third party in the possession of the credit institution. Therefore, these funds must be excluded from the institution’s property used to satisfy creditor claims.

    By Armands Rasa, Partner, and Anete Boze, Attorney, Widen

    This article was originally published in Issue 11.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Ukraine: The Changing Landscape of Cross-Border Finance

    The Russian aggression against Ukraine has reshaped the landscape of cross-border finance in the country. While the initial shockwaves of the conflict saw financing dry up almost entirely, with most support directed toward the government, a gradual but significant shift has occurred.

    In the immediate aftermath of the invasion, all lending to Ukraine understandably stalled, with only emergency funding provided to the Ukrainian government, which was responsible for keeping the country’s financial system from collapsing. On its part, the National Bank of Ukraine (NBU) used its currency control mandate to impose an almost complete ban on making cross-border payments from Ukraine. Nearly three years after the full-scale invasion, the financing situation is far from what it was pre-2022, but participants and regulations have adapted.

    The Shift in Funding Sources

    As is often the case under similar circumstances, while private lending froze, support continued to flow from international financial institutions (IFIs) like the EBRD and IFC. Since 2022, the EBRD has deployed over EUR 4.5 billion in Ukraine and intends to continue supporting the country in different sectors and industries. The IFC has invested USD 1.6 billion in Ukraine, more than double the average annual financing provided before the invasion.

    In addition to IFIs, foreign governments have been providing substantial support to Ukraine in many forms at a government-to-government level. Many foreign governments have also designated private-sector programs for Ukrainian businesses. These are usually implemented through export credit agencies or national development banks. The projects cover different products, ranging from portfolio guarantees for banks, smaller and medium-sized trade finance, and large project finance.

    Faced with unprecedented challenges, private lenders have primarily focused on managing their existing investments in Ukraine. This has often involved restructuring debt and deferring payments rather than taking on new risks. In some cases, private lenders have participated in new financing under the protective umbrella of governmental agencies or ECAs, mitigating their exposure to the volatile environment.

    Regulatory Adaptation

    Recognizing the need to stimulate investment and facilitate reconstruction, the NBU has adopted a pragmatic approach to regulating cross-border finance. A key element of this approach has been to provide greater flexibility for projects backed by highly reputable institutional lenders, including IFIs. In these cases, borrowers are granted considerable freedom to service and repay their debt, a move designed to incentivize further investment from these crucial sources.

    This regulatory flexibility stands in contrast to the more restrictive environment faced by private lenders. While they are permitted to receive interest payments on pre-existing debt that was not in default as of February 2022 (with additional conditions attached), principal repayments remain restricted. To encourage private lending, the NBU has introduced a specific regime for “new money” private lending, where funding has been provided since June 2023. Only funds lent from outside of Ukraine would be eligible (i.e., a foreign lender using funds held in Ukraine to provide a loan would not be able to take the benefit of getting repaid to a foreign account). For these projects, both servicing and repayment are allowed. Still, limitations on early repayment are in place, meaning that once parties agree on a repayment date or repayment schedule, the borrower will be forced to stick to it. Finally, the NBU has reintroduced a requirement that was abolished many years ago – a so-called “maximum interest rate,” a cap on interest, fees, and all servicing payments other than the principal repayment. This rate is currently set at 12% per annum, adding another layer of complexity for private lenders to consider.

    The Outlook for Cross-Border Finance

    The future of cross-border finance in Ukraine remains closely tied to the trajectory of the war and the ongoing and future recovery efforts. In the immediate future, the present categories of lenders are expected to continue playing a key role in providing new financing due to the security situation. At the same time, beyond the immediate security concerns, a persistent challenge to attracting finance from any source is the availability of bankable projects with sound legal structures and viable business models. Ultimately, to ensure Ukraine’s long-term economic recovery, businesses, the government, and regulators must collaborate to establish a transparent and adequate regulatory framework, develop attractive projects, and leverage cross-border finance for the nation’s reconstruction and recovery.

    By Anton Korobeynikov, Partner, Sayenko Kharenko

    This article was originally published in Issue 11.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Ellex Advises Blackwall on EUR 45 Million Series B

    Ellex has advised Estonian-based Blackwall on its EUR 45 million series B funding round led by Dawn Capital with participation from existing investors.

    Blackwall is an AI-enabled security and web infrastructure company.

    According to Ellex, the new investment will enable Blackwall to double its headcount, accelerate growth, and expand further into the U.S. and APAC markets.

    The Ellex team included Partner Antti Perli and Senior Associate Alla Kuznetsova.

    Ellex did not respond to our inquiry on the matter.

  • Schoenherr and DWF Advise on Dealavo’s Sale to JTL-Software

    Schoenherr has advised Dealavo on its sale to JTL-Software. DWF advised JTL-Software.

    JTL-Software is a provider of e-commerce software solutions and a portfolio company of Hg, a London-based private equity firm targeting technology buyouts primarily in Europe and the US.

    Headquartered in Poland, Dealavo specializes in price and product monitoring solutions. According to Schoenherr, the transaction, the value of which remains confidential, provides new growth opportunities for Dealavo and reinforces its position in the global e-commerce technology sector.

    The Schoenherr team included Partners Tomasz Kwasniewski and Szymon Okon, Counsel Dawid Brudzisz, and Associate Witold Oszczanowski.

    The DWF team included Local Partners Anna Wietrzynska-Ciolkowska and Izabela Szczygielska, Of Counsel Agnieszka Duda, Senior Counsel Radoslaw Biedecki, Counsel Ewelina Madej, and Junior Associates Iga Bialek, Karolina Bac, and Magdalena Bronikowska.

  • Miskovic & Miskovic Advises Six Croatian Banks on Republic of Croatia’s State Bonds Issuance

    Miskovic & Miskovic has advised Erste & Steiermaerkische Bank, Hrvatska Postanska Banka, OTP Banka, Privredna Banka Zagreb, Raiffeisenbank Austria, and Zagrebacka Banka on Republic of Croatia’s state EUR 1.75 billion bonds issuance.

    According to Miskovic & Miskovic, the governmental bond issuances included retail investors and was supported by over 18,000 citizens investing approximately EUR 590 million, alongside institutional investors who contributed around EUR 1.16 billion. In total, bonds worth EUR 1.75 billion were issued. Since the first retail government bond issuance in 2023, a total of 251,000 retail investors have invested EUR 7.4 billion in Croatian governmental papers, significantly bolstering the capital markets in Croatia.

    The Miskovic & Miskovic team included Partner Pavo Miskovic and Attorneys at Law Mislav Loncar and Hana Fiala.

  • Rymarz Zdort Maruta and Linklaters Advise on Innova Capital’s Acquisition of Majority Stake in ProService Finteco and 50% Stake in IFDS

    Rymarz Zdort Maruta has advised Innova Capital on the acquisition of a majority stake in ProService Finteco and a 50% stake in Investment Funds Depositary Services. Linklaters ProService Finteco.

    Innova Capital is an independent private equity advisor operating in Poland and Central and Eastern Europe.

    ProService Finteco is a provider of technology-driven fund management solutions. The previous owners of ProService Finteco were funds managed by Oaktree Capital Management, L.P. and Cornerstone Investment Management.

    Investment Funds Depositary Services specializes in depositary and brokerage services for closed investment funds in Poland. 

    In 2021, Rymarz Zdort advised on the financing for ProService Finteco’s takeover of Moventum (as reported by CEE Legal Matters on June 17, 2021).

    The Rymarz Zdort Maruta team included Partners Jacek Zawadzki, Iwona Her, and Adam Puchalski, Senior Associates Malgorzata Banaszkiewicz, Aleksander Jakubisiak, Pawel Mazur, Kamil Bulakowski, and Szymon Cieniawski, and Associates Szymon Rutecki, Magdalena Mentrak, Przemyslaw Nycz, Adam Drgas, Julia Kosiniak, and Karolina Chudy.

    The Linklaters team included Warsaw-based National Managing Partner Marcin Schulz, Counsel Mikolaj Bieniasz, Managing Associates Magdalena Szewczyk, Wojciech Kobylinski, Barbara Wanat, and Maciej Ficinski, Senior Associates Adam Usiadek and Jan Jurga, and Associates Justyna Tuleja, Jakub Gerula and Paulina Osiecka as well as further team members in London and Luxembourg.

  • Cobalt Wins Dispute with Balta over Damage Claim Involving Volvo Truck

    Cobalt has successfully represented Swedish truck manufacturer Volvo Truck Corporation in a dispute initiated by Balta against Latvian truck conversion specialist Unitruck.

    According to Cobalt, Balta had claimed nearly EUR 469,000 in damages plus statutory default interest following a truck fire during the warranty period. The dispute arose when a Volvo truck, equipped with woodchipper machinery by Unitruck, caught fire. Both Unitruck and Volvo argued that the incident resulted from incorrect use – an exception to the warranty – rather than a defect in the manufacturer’s equipment.

    According to the firm, following proceedings before three court instances, Cobalt demonstrated that the truck and equipment were operated in breach of Volvo’s usage instructions, thereby activating the warranty exceptions. The dispute concluded with the Republic of Latvia’s Senate declining cassation proceedings, effectively upholding the second instance court’s decision.

    The Cobalt team included Partner Sandija Novicka and Senior Associate Sabīne Zaula.

  • Gide Advises BNP Paribas Bank Polska on Financing Three Retail Projects

    Gide has advised BNP Paribas Bank Polska on granting a new facility to finance three retail projects from the portfolios of Newgate Investment and Torwell Investment including Galeria Sieradzka, Wysockiego Retail Park in Bialystok, and Certe Convenience Shopping Center in Gdansk-Suchanino.

    The Gide team included Partner Pawel Grzeskowiak, Counsel Rafal Osetek, Attorney at Law Pawel Wasiel, Associate Michal Wisniewski, and Trainee Szymon Makowski.

    Gide did not respond to our inquiry on the matter.

  • Paksoy, Linklaters, Herguner Bilgen Ucer, and Moskwa Jarmul Haladyj Advise on Actera Group and Esas Holding’s Exit from Mars Spor Kulubu

    Paksoy, working with Linklaters, has advised Actera Group and Esas Holding on their exit from Mars Spor Kulubu to Benefit Systems. Herguner Bilgen Ucer and Moskwa Jarmul Haladyj advised Benefit Systems.

    Mars Spor Kulubu operates in the Turkish fitness club market under the MAC Fit, MAC One, and MAC Studio brands, as well as the NuSPA chain of spa centers.

    Benefit Systems is a Polish fitness and employee wellness solutions company listed on the Warsaw Stock Exchange.

    The Paksoy team included Partner Ayse Demirel Atakan and Associate Meric Sacak Albas.

    The Linklaters team included Partner Daniel Cousens and Managing Associate Michal Szperzynski.

    The Herguner Bilgen Ucer team included Partner Senem Denktas, Senior Associates Sertac Cosgun and Hazar Basar, and Senior Competition Consultant Nese Nur Yazgan.

    The MJH team included Partners Lukasz Blazejczyk and Pawel Moskwa.

  • Chambers Europe 2025: 1st place ranking for the tax practice of bpv Huegel

    This makes bpv Huegel’s tax practice top-ranked in Chambers Europe. This confirms the leading position of bpv Huegel in tax law advice.

    20 March 2025. bpv Huegel is ranked in Band 1 for tax law in the Chambers Europe Ranking 2025. In addition, partner and head of tax Nicolas Wolski and tax partner Kornelia Wittmann have also been individually recognised as leading practitioners.

    The tax practice now is holding top positions in Band 1 in three major international tax rankings (Chambers, Legal 500, ITR World Tax). As recently as September 2024, the tax team was named “Tax Litigation Law Firm of the Year – Austria” and “Transfer Pricing Law Firm of the Year – Austria” by ITR.

    “We are proud that, in addition to the ITR and Legal 500 rankings, we are now also ranked in the top category by Chambers. A big thank you to all team members who have worked together to achieve this success over the last few years,” says Nicolas Wolski, head of the tax practice.

    The team led by Nicolas Wolski, who is dual-qualified as both a lawyer and tax advisor in both Austria and Germany, advises leading Austrian and international companies, particularly in the areas of M&A tax, tax disputes and general corporate tax.