On September 19th, 2019 Verkhovna Rada of Ukraine has adopted the Law No. 1070 “On Amendments to Certain Laws of Ukraine on Improving the Procedure of Financial Restructuring” (the “Law”), which extends legal force of the Law of Ukraine “On Financial Restructuring” for another three years. The Law has been supported in the second readingby 300 deputies and on 23rd of September it has been signed by the President.
This Law amends several statutory acts, including the Laws “On Protection of Economic Competition”, “On Mortgage”, “On Securing Creditors’ Claims and Registration of Encumbrances” and “On Financial Restructuring”.
The Law is expected to clarify, simplify and accelerate the procedure of voluntary financial restructuring of debtors.
The main changes that will be introduced by the Law after its entrance into force are as follows:
debtors who are related parties, provided that (a) such debtors have filed a joint application; and (b) the involved creditors-financial institutions of each debtor have agreed in writing to such procedure. The requirement for such debtors to have at least one joint creditor – financial institution has now been removed.
and namely the transfer of any property of the involved creditors in favour of the debtor for renting or leasing, as well as conclusion by the parties of other contracts provided by the law.
secretariat about cancellation of restructuring negotiations due to failure to reach an agreement.
time during the financial restructuring procedure, as well as pursuant to the concluded financial restructuring plan.
Financial Restructuring” the key procedural decisions passed upon initiation of financial restructuring (establishment of creditors’ committee, extension or lifting of moratorium etc) shall not require the signature of the debtor, but shall be signed by the creditors only – the debtor will only be informed of such decisions either by the secretariat or by the involved creditors.
✓ The concentration shall not be considered unlawful if the bank or other financial institution acquires assets (inthe form of a single property complex (yedynyi mainovyi kompleks), participatory interests (shares, equity)) of a commercial entity, provided that such acquisition is envisaged in the restructuring plan and is being carried out by way of enforcement of pledge (mortgage) or other security encumbrance. Another precondition is that such property must be subsequently alienated within two years from the date of acquisition in favour of commercial entities which are not connected with such bank or financial institution by control relations. The absence of a concentration permit in the course of such actions shall not be considered violation of law. In addition, it is required that: (a) the acquisition of such property into ownership must be conducted against full or partial repayment of the debt owed to a bank or another financial institution, and (b) an entity whose participatory interests (shares, equity) are acquired, is not a bank or another financial institution. It should be noted, however, that the Law does not eliminate the currently existing contradictions in the definitions of “integral property complex” / “single property complex” (although the Law provides that “single property complex” is a broader term, which includes “integral property complex” as its element).
✓ Acquisition of the relevant assets into ownership or use (management, rent, leasing, concession, etc.) will notbe considered concentration if such actions are envisaged in the restructuring plan. The absence of a concentration permit in the course of such actions shall not be considered violation of law as well.
insufficient value of the collateral. Now, this period shall not be limited by the time of carrying out the “financial restructuring procedure”, but also shall extend to the period of “implementation of the restructuring plan”.
Participation in negotiations with creditors to agree on commercial terms of restructuring.
Due diligence of:
Drafting and submission of documentation concerning restructuring:
Support in obtaining of the opinion of an independent expert on the prospects of the debtor’s commercial activities.
Preparation of contractual documentation:
Support of alienation of debtor`s assets:
Support of corporate restructuring:
Tax advice, including legal support in settlement with tax authorities as a result of financial restructuring, and tax debt discharge.