Poroshenko signs legislation improving creditor protection

Ukrainian President Petro Poroshenko signed on Apr. 15
the newly created bankruptcy code, legislation that is aimed to better protect
the interests of creditors in relation to their insolvent debtors. The law was adopted by parliament in October 2018,
simplifying the procedures of debt restructuring, debtor financial recovery and
liquidation, as well as creating a bankruptcy procedure for individual debtors.

On the other end, the law gives more power to
creditors to control insolvent debtors and companies that choose to go bankrupt
or become liquidated. It sets clear time limits on debt restructuring,
financial recovery and liquidation. On top of that, it cancels the moratorium
on foreclosure of individual property pledged under mortgage loans, while
granting time to individuals to agree on new debt restructuring terms on
special conditions.

By law, the president has 15 days to either sign a
bill approved by parliament (and turn it into law) or veto it. In this case,
the president exceeded the deadline by almost 12 times.

Alexander Paraschiy: It’s hard to understand what motivated Poroshenko to delay the bill’s
signing, but it’s positive for the investment community that the code is now
law. Its implementation should improve the protection of Ukraine’s banks in
their relations with dishonest borrowers, limit such borrowers’ ability to avoid
their obligations, and thereby should help the banks to faster resolve their
bad debt issues. Better protection may also stimulate the banks to increase
their lending activity and simplify it. All in all, this may lead to a visible
increase in lending activity in late 2019 or 2020, which may have positive
effect on Ukraine’s macro indicators.