New Bankruptcy Code of Ukraine: What to anticipate?
Global tendencies and the intensively developing restructuring and bankruptcy legal environment across the globe make it impossible to ignore such processes. Ukraine does not.
On 15 April 2019 the President of Ukraine finally signed the first ever Code of Ukraine on bankruptcy procedures (“Bankruptcy Code of Ukraine”), drafted with the assistance of the IMF and the World Bank. It shall replace the current Law of Ukraine “On Restoring Solvency of the Debtor or Declaring It Bankrupt” (“Law of Ukraine”) on its full enactment date, i.e. 21 October 2019. It is expected that the national restructuring and bankruptcy frameworks should become more effective, transparent and predictable than before.
Among the key anticipated developments that the Bankruptcy Code of Ukraine suggests, are the following.
Improved preventive restructuring framework
The national preventive restructuring framework, the socalled ‘rescue procedure of the debtor before the opening of the bankruptcy proceeding’, is relatively new for Ukraine. It was introduced not that long ago and purported to rescue a debtor before it becomes insolvent.
In fact, under the former framework envisaged by the Law of Ukraine, no real practical implementation was possible. Mostly, the problem concentrated around the all-secured creditors’ consent, needed for the approval of the rescue plan, which was almost impossible to obtain.
With the adoption of the Bankruptcy Code of Ukraine the whole concept of this procedure has undergone some significant changes. The former ‘dead’ provisions on preventive restructuring have been perfected to give way to more practical implementation. The amended preventive rescue procedure is now more akin to the English scheme of arrangement under the UK Companies Act and also embraces some features of the Chapter 11 US Bankruptcy Code restructuring procedure.