On 14 June 2016 the Verkhovna Rada of Ukraine adopted the Law "On Financial Restructuring" (the Law), which aims to solve many conflicts and assist in debt restructurings in Ukraine.

The Law provides a new procedure for restructuring financial debt of Ukrainian corporate debtors (the Restructuring).

Special features of new Restructuring procedure include:

  • Restructuring may be commenced by a debtor only (not creditors).
  • It is an out-of-court procedure of negotiations between a debtor and its creditors.
  • Joint Restructuring of several debtors–members of the same group is allowed, provided that such debtors have at least one common creditor.
  • Creditors participating in the Restructuring are selected by the debtor (Selected Creditors.)
  • There shall be at least one financial institution (Ukrainian financial institution, or foreign financial institution or international financial organisation, who provided a loan under agreement registered with the NBU) among the Selected Creditors.
  • Status of various types of creditors (e.g. financial institutions, related parties and other creditors) differs. Generally, financial institutions have more rights compared to other creditors; rights of related parties of a debtor are substantially limited.
  • The debt subject to the Restructuring shall comprise at least 50 percent of the total amount of claims of creditors-financial institutions towards a debtor (excluding related parties.)
  • The term of the Restructuring shall not exceed 180 days.
  • Partial moratorium on settlement of creditors' claims is imposed on the day the Restructuring commences.
  • The Restructuring Plan shall be approved by 100 percent of votes of all of the Selected Creditors or at least 2/3 of votes of all of the Selected Creditors and the arbitrator. The Restructuring Plan is binding on all of the Selected Creditors.

The Law provides for special bodies to be established – the Supervisory Board, the Secretariat and the Arbitrage, which will perform administrative functions in the Restructuring and arbitrate disputes.

The Law is yet to be signed by the President of Ukraine and officially published. The Law will enter into force in three months after its official publication and will remain effective for three years (except for certain provisions).

All the Restructurings commenced under the Law shall continue in accordance with the framework provided for in the Law.

Should this matter be of interest to you, please let us know, and we will revert with a more detailed analysis.



About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.