Vladyslav Filatov about insolvency and bankruptcy in Ukraine

Vladyslav Filatov about insolvency and bankruptcy in Ukraine

The applicable legislation significantly restricts the feasibility for creditors to initiate bankruptcy proceedings and fails to protect their rights to any significant extent. Meanwhile, debtors may freely evade fulfilment of their obligations. In reality, bankruptcy proceedings last too long, the solvency of debtors is restored extremely rarely, and the ratio of the amount recovered to the amount of debt is insignificant. However, certain improvements in this area need to be emphasised. In particular, judicial authorities expand the debtors’ estates through restoring the titles to the property alienated prior to initiation of the bankruptcy proceedings. The latter is achieved through invalidating transactions aimed at alienation of the relevant assets. Using the information regarding the financial history of debtors, creditors can expect their claims to be satisfied in significantly larger proportions.

Bankruptcy proceedings are initiated against debtors in order to improve their financial condition. Other important goals include preservation of the feasibility for debtors to conduct business in the future, protection of creditors’ interests and satisfaction of their claims to the maximum possible extent out of the proceeds obtained as a result of selling of the available property. The investment attractiveness of Ukraine largely depends on the improvement of efficiency of the bankruptcy proceedings.

As a rule, bankruptcy cases represent complex court proceedings. They can involve various claims against debtors that may not be directly related to the restoration of their solvency. A lawyer representing a creditor should have proficient knowledge in various branches of law, e.g. labour, corporate, financial, and tax. For the case to be considered properly, it is very important for the relevant insolvency receiver to have special knowledge and conform to high ethical standards.

Specialists place high hopes on the adoption of new regulations. The Draft Bankruptcy Code should resolve many existing regulatory problems and introduce the concept of bankruptcy of individuals that is new for Ukraine. The adoption of the codified law will significantly increase the efficiency of the proceedings at the pre-trial and trial phases. This will undoubtedly raise the interest of both creditors and debtors in the application of bankruptcy procedures and restoration of solvency.