President Petro Poroshenko has signed a new law that will drastically change bankruptcy regulation in Ukraine.
The Code of Bankruptcy Proceedings was adopted by the Ukrainian parliament on October 18, 2018 and pertains to personal and corporate bankruptcy, as well as to the moratorium on residential real estate. It will replace a previous law that has been in effect since 1992.
The new law’s purpose is to render bankruptcy procedures more transparent and efficient as well as to present a new legal concept in Ukrainian legal framework.
It should also have a positive impact on the Ukrainian debt market and provide better protection of creditors’ rights.
On a personal level, individuals who are insolvent – or on the verge of insolvency – will now be able to initiate bankruptcy proceedings to clear their debts.
The law also simplifies corporate bankruptcy. It ensures the right of a creditor to request the launch of bankruptcy proceedings as soon as it perceives signs of the debtor’s insolvency. This both empowers the creditor and increases the chance of preventing insolvency.
Previously, creditors would always appoint a special committee to handle bankruptcy proceedings. Now, they may manage the proceedings within the creditor’s meeting and can participate in designating the administrator who will direct the proceedings.
The new code also improves the legal status of secured creditors whose stakes in insolvency cases are the greatest. In addition, they may now also initiate bankruptcy and challenge court rulings.
These new regulations will further increase transparency by allowing any potential investor to purchase debtors’ assets during online auctions that will be accessible on open web portals.
Now in regard to the residential real estate moratorium dated from 2014, the new Bankruptcy Code abolishes it.
The new code will essentially restructure all foreign currency debts that accrued prior to the signing of the Bankruptcy Code by Poroshenko.
It will – among other things – convert all foreign debts into Hryvnia at the National Bank of Ukraine’s exchange rate of the day the bankruptcy case is opened by the court and force the debtor to fulfill all of its obligations.
