Živković Samardžić, one of the Serbia’s leading full-service independent law firms, has secured an important victory for its client AIK Banka in the Supreme Court of Cassation of Serbia.
The dispute with Agrobanka in bankruptcy concerned the appropriation of encumbered real property instead of satisfaction of secured claim and the rights of lower ranking hypothecary creditors. In the case at hand AIK Banka satisfied its first ranking hypothec by appropriation of the encumbered real property, and given the fact that the lower ranking hypothec of Agrobanka in bankruptcy remained, applied to the court with the request to extinguish and erase it. The first instance court and the appeals court denied such request, quoting the statutory provision claiming that the rights of lower ranking hypothecary creditors remain reserved. Both courts held that the lower ranking hypothec is extinguished only in case the claim secured by such lower ranking hypothec is satisfied.
Živković Samardžić were retained by AIK Banka to lodge an extraordinary legal remedy, the request for revision of final judgement with the Supreme Court of Cassation as the highest court instance in Serbia. In its decision delivered recently, the Supreme Court of Cassation has quashed the final judgement and ordered a retrial to the first instance court. In delivering the decision, the Supreme Court of Cassation held that the rights of lower ranking hypothecary creditors remain reserved only to the extent the value of appropriated real property exceeds the claim secured by the prior ranking hypothec (hypothec of the appropriating creditor).
“The decision is setting a precedent of significant importance for any hypothecary creditor who satisfied secured claim through appropriation of encumbered real property, prior to the 2015 amendments to the Law on Hypothec,” said Miloš V. Milošević, Dispute Resolution Partner who led the Živković Samardžić team successfully representing AIK Banka at the Supreme Court of Cassation of Serbia.