05 June 2018

If the citizens of Ukraine are really in a difficult financial situation, they need to give them the opportunity to start life from scratch, without debts - such is the main proposal of the working group of the Independent Association of Banks of Ukraine when finalizing the provisions of the Code of Ukraine on bankruptcy procedures.

The working group was established under the Ministry of Justice, and consists of representatives of the IMF, the World Bank, and the Association of Lawyers of Ukraine. The head of the group from the Independent Association of Banks of Ukraine is Elena Ermolova, deputy head of the troubled assets department of Bank Credit Dnipro.

The draft Code provides for the introduction of a new procedure for Ukraine for the bankruptcy of individuals in addition to the existing possibility of bankruptcy of an individual entrepreneur. The participants of the working group supported the proposals of NABU on the construction of a new philosophy of bankruptcy procedure for individuals.

"We believe that it is only the individual that can initiate the opening of the bankruptcy case of an individual, this is his right, and not an obligation. The applicant must submit a declaration of income and property - his and his family; creditors will verify the information provided and, in case of good faith, the applicant must offer acceptable conditions for debt restructuring with the possibility of partial forgiveness; in case of revealing of dishonest behavior, creditors have the right to decide not to apply to this individual a bankruptcy procedure and release from debts, "Elena Yermolova commented on the proposal of NABU. The expert noted that the case of bankruptcy of an individual is not considered creditors as an alternative to an already existing instrument of collecting the debtor's property.

The Draft Code of Ukraine on Bankruptcy Procedures, adopted by the Verkhovna Rada of Ukraine in its first reading in March 2018, aims to make the procedure for restoring the solvency of debtors and their bankruptcy more efficient and transparent, to exclude numerous abuses, when the property of bankrupts is sold for pennies and creditors can not influence on this process. The changes should prevent widespread practice when bankruptcy procedures for insolvent debtors last for years, while debtors continue to work, use the assets of their enterprises and make a profit, and the creditors do not receive a penny to repay their claims.

The draft Code already takes into account most of the proposals of the Independent Association of Banks of Ukraine on the procedure for bankruptcy of legal entities. The expert expressed her hope that the proposals of the working group concerning the bankruptcy of individuals will also be taken into account when preparing the Code for the second reading.


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