1. The subject of the dispute is the recovery of debt under a loan agreement from the borrower and guarantors.
2. The court of cassation established that the appellate court incorrectly applied the provisions of the Law of Ukraine “On Mortgage,” failing to take into account that the bank had executed an extrajudicial foreclosure on the mortgage property during the consideration of the case. The court indicated that the appellate court should have assessed the debt calculation, verified its validity taking into account the accrued interest and penalties, and also determined whether the guarantee had terminated in accordance with Article 559 of the Civil Code of Ukraine. In addition, the court had to investigate whether the creditor had made claims against other guarantors and whether the debt had been repaid in other proceedings in order to establish the actual amount of debt to be recovered from the guarantor in this case. Since the appellate court did not establish these circumstances, this made it impossible to establish the actual circumstances relevant to the proper resolution of the case. The court noted that in the event that the performance of the principal obligation is secured by several means, the principal obligation does not terminate if the mortgagee’s exercise of its rights to foreclose on the mortgage property does not result in full satisfaction of its claims.
3. The Supreme Court reversed the decision of the appellate court and remanded the case for a new trial to the court of appeal.
