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Implementation of the Code on Bankruptcy Procedures in Ukraine

On October 21, 2019 the Code of Ukraine on Bankruptcy Procedures (the “Code”) became effective and the law regulating bankruptcy (the Law of Ukraine No. 2343-XII On Restoring a Debtor’s Solvency or Recognizing It Bankrupt, hereinafter - the “Law No. 2343-XII”) became invalid.

It should be noted that the Code was adopted last year (document as of October 18, 2018 No. 2597-VIII) and entered into force on April 21, 2019. However, according to Final and Interim Provisions the Code shall become effective 6 months after its entry into force.

The new Code provides for a number of conceptual innovations, including the introduction of a bankruptcy institute of an individual, the absence of a quantitative threshold for initiating a procedure, as well as a range of persons was significantly expanded that is the bankruptcy subjects may be the state enterprises and authorities.

An important innovation is the establishment of an electronic trading system and the authorization of electronic platforms. According to Final and Interim Provisions of the Code, the provisions governing the establishment of an electronic trading system and electronic platforms authorization shall become effective 3 months after this Code enters into force.

The Code also introduces amendments to the existing laws and regulations, in particular: the Civil Code of Ukraine, the Commercial Procedure Code of Ukraine, the Law of Ukraine On Mortgage, the Law of Ukraine On Pledge, the Law of Ukraine On Enforcement Proceedings, etc.

Despite the invalidation of the Law of Ukraine On Moratorium on Foreclosure of Ukrainian Citizens' Property Provided as Collateral for Foreign Currency Loans, the Code provides for the provisions protecting the citizens’ rights in case of individuals’ mortgage debt in foreign currency.

As of the date this Code enters into force, further bankruptcy proceedings shall be conducted in accordance with its provisions, regardless of the commencement date of bankruptcy proceedings. Exceptions are the cases being under reorganization at the moment of entry into force of this Code, which proceedings are in process in accordance with Law No. 2343-XII. And the transition to the next court procedure and further proceedings in these cases will be carried out in accordance with the Code.

In general the new Code is a pro-creditor and innovative, however it has sufficient legal gaps and controversies that may be resolved by case law in the future.

Igor Kalitventsev

Managing Partner

KPD Consulting

 

 

Should you have any questions with respect to above or require any additional information, please do not hesitate to contact Mr. Igor Kalitventsev (i.kalitventsev@kpdconsulting.com.ua). We will be pleased to assist You. The information contained in this overview is not intended to provide legal advice and should not be relied on or treated as a substitute for specific advice concerning individual situations.

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