A Further Step Taken By Ukraine To Simplify Out Of Court Loan Workouts

Author:Mr Jonathan Morris, Alex Kay and Tom Astle
Profession:Hogan Lovells
 
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With thanks to Anton Korobeynikov of Sayenko Kharenko for his contribution to this article

On 25 September 2019, the Ukrainian Parliament brought into force law No. 112-IX (the “Law“). The purpose of the Law is to correct deficiencies in existing legislation and further promote out-of-court financial restructurings in the jurisdiction. The adoption of the Law comes in light of the high volume of non-performing loans which still exist in Ukraine.

The Law's key provisions are as follows:

Enabling the use of a restructuring procedure by related debtors with no common creditors. This amends the previous position which required related borrowers to have at least one common creditor. Removing the need for merger clearance from the Anti-Monopoly Committee of Ukraine when a creditor receives title in assets or shares through a restructuring. Confirmation that a creditor's claim survives if an out-of-court pledge or mortgage enforcement fails to generate sufficient proceeds. Clarifying that a creditor can assign its rights at any time in the course of the financial restructuring process to a third party. The adoption of the Law follows the introduction by the Ukrainian parliament in 2016 of the LawOn Financial...

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