SIGNUM successfully secures invalidation of sale transactions and return of leased asset

We have recently secured a favorable outcome for our client in a dispute with the debtor concerning the invalidation of fraudulent sale transactions and the return of the leased asset.

Our client, the lessor, had entered into a financial leasing contract with the lessee. Following a material default in lease payments, the lessor unilaterally terminated the lease contract. Under the terms of the contract, the lessee was obliged to return the leased asset, valued at over 60 million tenge. Instead, in violation of the contract, the lessee unlawfully transferred the excavator to the director’s relative and subsequently resold it to another party in exchange for cash and a vehicle.

During the proceedings, it was established that the contested transactions lacked any genuine economic substance: (1) no evidence of actual payment was produced, (2) the excavator was absent from the lessee’s accounting records, (3) neither party presented invoices, fiscal receipts, or any documentation evidencing a legitimate transfer of ownership.

The case also revealed elements of bad faith and abuse of rights. The excavator had been deregistered, resold, and moved to an undisclosed location. Third parties relied on a vehicle registration certificate listing their company as the possessor. We demonstrated that such certificate is merely an administrative record and does not constitute proof of ownership. Ownership remained with the lessor, as explicitly provided in the purchase contracts with the lessee and transfer acts. We also successfully involved the original seller as a third party to establish the factual background of the initial sale.

Throughout the litigation, the opposing parties presented misleading information and attempted to misdirect the court with claims of bona fide purchase. The court ultimately rejected these arguments, found the sale contracts invalid, and ordered the return of the excavator to the rightful owner.

This case highlights the importance for lessors not only to secure their rights contractually, but also to actively enforce them in court and before state authorities. The decision confirms that sham contracts lacking payment and documentation may be set aside, particularly where they serve to conceal assets. It also reaffirms that under Kazakh law, ownership remains with the lessor despite attempts to disguise transfers, and that contractual restrictions on disposal of leased property will be upheld by the courts.