UKRAINE HAS INTRODUCED A PROCEDURE FOR VOLUNTARY FINANCIAL RESTRUCTURING OF THE DEBTOR

Legal Alert July 19, 2016

image002

Українською

UKRAINE HAS INTRODUCED A PROCEDURE FOR VOLUNTARY FINANCIAL RESTRUCTURING OF THE DEBTOR

On July 19, 2016 in the newspaper “Golos Ukrainy” № 134 there was published the Law of Ukraine “On Financial Restructuring” number 1414-VIII as of June 14, 2016 (hereinafter – the “Law”), which shall take effect in three months from the date of its publication and is valid within three years.

For duration of the Law in Ukraine there is introduced a procedure for voluntary financial restructuring of the debtor, who has a debt to at least one not associated with him financial institution and economic activity of the debtor may be considered promising.

Among the key novelties imposed by the Law there can be outlined the following:

•     financial restructuring procedure is carried out without going to court through negotiations between the debtor, its associated parties and involved creditors;

•     financial restructuring can be initiated only by the debtor;

•     a list of creditors participating in the financial restructuring is determined by the debtor;

•     according to the Law restructuring pertains to economic activities and assets of the debtor (including those located outside Ukraine) as well as liabilities of the debtor (including those arising under contracts governed by foreign legislation);

•     financial restructuring of the debtor starts with the consent of non-associated to the debtor financial institutions – creditors who aggregately own at least 50 percent of the total amount of claims, and lasts no more than 180 days;

•     from the beginning of the procedure of financial restructuring there is introduced a moratorium on the debtor’s satisfying the claims of involved creditors and implementation of measures to meet these claims (including the period of time for submission of claims to the guarantors of the debtor is suspended);

•     the moratorium does not apply to (i) the claims of the uninvolved creditors (with certain exceptions), (ii) claims on liabilities arising from injury to life and health of citizens, and (iii) claims for the payment of arrears in salaries;

•     to coordinate the issues of organization and carrying out procedure of financial restructuring of the debtor a special body is created – it is a supervisory board, which creates the secretariat (to solve administrative issues) and arbitration (to resolve disputes that arise during the procedure of financial restructuring of the debtor);

•     during the procedure of financial restructuring there is developed a restructuring plan approved by the involved creditors;

•     restructuring plan is considered approved if all involved creditors voted for him. If 2/3 of involved creditors voted for the approval of the restructuring plan, a final decision on approval of the restructuring plan is made by arbitration.

______________________________________________________________

This Legal Alert is intended as a general overview of latest changes in legislation of Ukraine and does not constitute a legal advice.

For further information please contact Antika Law Firm:

12, Khreschatyk Str., 2nd floor,

Kyiv, 01001, Ukraine

tel./fax: +38 044 390 09 20/21

office@antikalaw.com.ua

www.antikalaw.com.ua