On 21 October 2019 the Bankruptcy Code of Ukraine shall come into legal force ("Code"). The rules on operation of the electronic trade system within bankruptcy proceedings shall become effective earlier, on 21 July 2019.
The Code amends the bankruptcy procedure of legal entities and introduces the bankruptcy procedure for individuals (which was not previously applicable in Ukraine).
The most significant changes are the following:
- Bankruptcy proceedings may now be commenced against an individual (however, only upon his/her own request).
- The minimum monetary threshold for commencement of bankruptcy proceedings has been cancelled. From now on, to commence proceedings the creditor shall only prove that: 1) its claims are non-disputed; and 2) the debtor is unable to pay such debt.
- A settlement agreement as a separate stage of bankruptcy proceedings no longer applies.
- The debtor's assets shall be sold at auction through the new electronic trade system, e.g., ProZorro.
- The bankruptcy administrator may be terminated by creditors' committee request at its own discretion.
- Bankruptcy proceedings against a legal entity may not be suspended.
- Grounds for invalidation of a debtor's agreements in the course of bankruptcy proceedings have been extended.
- The list of court decisions, which may be challenged with the Supreme Court, is now limited. The following decisions may not be challenged: 1) invalidation of the debtor's agreement; 2) termination of the bankruptcy administrator; 3) moving to the next bankruptcy stage; and 4) approval of the financial rehabilitation plan.
The new rules shall apply starting from 21 October 2019 to all bankruptcy proceedings, including pending as of that date, except for those at rehabilitation stage.
This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.