Breakthrough in Ukraine - a successful bankruptcy law in a post-socialist country

✍ Scribed by Richard Wolfe; Gleb Glinka

• Publisher: John Wiley and Sons
• Year: 2001
• Tongue: English
• Weight: 77 KB
• Volume: 10
• Category: Article
• ISSN: 1180-0518
• DOI: 10.1002/iir.84

✦ Synopsis

marked the ¢rst anniversary of an important and progressive new law in Ukraine: ``The Law on Restoring the Solvency of the Debtor or Declaring It Bankrupt. '' Enacted in June 1999, and signed into law six weeks later by President Kuchma, this powerful and £exible legal instrument became e¡ective at the beginning of the calendar year, o¡ering thousands of heavily indebted industrial enterprises an alternative to outright liquidation. In the ¢rst year of the new law, more than 20 industrial ¢rms have commenced, with the consent of their creditors, restructuring cases in commercial court, have converted liquidation cases ¢led by their creditors under Ukraine's old (1992) bankruptcy law to restructuring cases, or have reached amicable settlements with their creditors, establishing a workable schedule of debt forgiveness and repayment. As information about the opportunities available under the new law spreads around the industrial, ¢nancial, and legal community, we can safely predict that hundreds of new cases will be ¢led.

The Ukrainian bankruptcy law draws heavily on the U.S. Bankruptcy Law, but also contains special provisions that adapt it to the realities of Ukrainian politics, culture, and legal system. Under Article 53 of the Ukrainian law, as in Chapter 11 of the U.S. law, debtor enterprise management can petition to reorganize and retain control of the enterprise.

The Ukrainian law, during its brief existence to date, has been far more e¡ective than its post-Soviet contemporaries, with the possible exception of the Russian law, under which a number of amicable settlements have been reached since its enactment in 1998.