ON OCTOBER 29, KHARKIV HOSTED THE EASTERN UKRAINIAN FORUM ON BANKRUPTCY IN UKRAINE.
THE EVENT WAS ATTENDED BY EXPERTS FROM THE EU PROJECT “PRAVO-JUSTICE” AND REPRESENTATIVES OF THE REGIONAL JUSTICE REFORM COUNCILS (RJRCS). In his speech , Dovydas Vitkauskas, Head of the EU Pravo-Justice Project, elaborated on the legislative restrictions on bankruptcy of state-owned enterprises, moratoriums on the opening of bankruptcy proceedings, the impact on the stability of market relations and the prospects for legislative changes. “We see positive dynamics in the development of the bankruptcy institution in Ukraine. However, much remains to be done to achieve better results, especially with regard to the issue of state-owned enterprises and moratoriums. All enterprises, regardless of their form of ownership, should have the same conditions for applying the bankruptcy institution. The state should use moratoriums as an exceptional tool for a short period of time,” said Dovydas Vitkauskas.

Roman Chumak, coordinator of the Kharkiv CCRP, moderated the session on the role of self-regulatory organizations in the development of independent professional activity. “The EU Pravo-Justice Project supported the establishment of Regional Justice Reform Councils so that regions could influence the policies of central government agencies.
In particular, the members of the RJRCs developed amendments to the Bankruptcy Code.
The EU Project also promotes self-regulation in Ukraine by supporting the activities of private bailiffs, notaries and insolvency officers.” Roman Chumak, attorney at law, insolvency receiver, managing partner of ARES Law Firm, emphasized .Olena Fonova, coordinator of the Donbas RRRP, judge of the Economic Court of Luhansk Oblast, presented proposals to improve the bankruptcy procedure for foreign currency borrowers. “The newest preferential bankruptcy procedure is much more favorable for foreign currency borrowers. It is free, fast, has bonuses for owners of “social housing” and other advantages.
At the same time, a number of procedural shortcomings make it virtually impossible to implement.
Representatives of the RRRP and experts of the Pravo-Justice Project, as part of the Working Group on Improving Bankruptcy Legislation, developed proposals to improve this procedure, which were included in the draft law No. 5739.” Elena Fonova noted.

Following the discussion, the participants agreed that there are many factors that impede the development of bankruptcy proceedings in Ukraine.
First of all, it is a large number of moratoriums at the legislative level that create obstacles to the initiation of bankruptcy proceedings for enterprises in entire sectors of the economy: energy, coal mining, etc.
Moratoriums can be introduced by the state only as a temporary measure, but in Ukraine, such moratoriums have been in place for years.
It is very important for the economy to remove “bad assets” from the market in a timely manner, rather than “protect” them from creditors through moratoriums.
Further work on improving the bankruptcy legislation is of great importance.
The Verkhovna Rada is currently considering draft laws developed by a working group under the Ministry of Justice.
The RDRP representatives joined the development of amendments to the legislation during the strategic session.
Particular attention was paid to the insolvency of individuals.
Currently, we do not have a large number of court cases, which is explained by the complexity of the procedure and the reluctance of citizens to use this opportunity.
In general, the participants agreed that it is necessary to simplify the judicial procedures for bankruptcy of individuals.
The participants also discussed the development of a self-regulatory organization (SRO) for insolvency officers.
Having passed the establishment stage, the community is now facing new tasks and challenges.
Thanks to the close cooperation of the National Association of Insolvency Practitioners and the Ministry of Justice, the SRO will soon be authorized to conduct training and advanced training for insolvency practitioners.
The work of the Disciplinary Commission of Insolvency Practitioners is of great importance for the development of the community of insolvency practitioners.
Proposals for reforming the system of disciplinary proceedings in the profession of insolvency receivers were presented at the event.
The relevant report will be presented later by the experts of the EU Project “Pravo-Justice”.
The issues of joint and several liability of the head of a bankrupt company were not ignored.
Court decisions show that this institution of liability is developing. For reference:Regional Justice Reform Councils (RJRCs) were established with the support of the EU Pravo-Justice Project and operate in Chernivtsi, Dnipro, Kharkiv, Lviv, Odesa regions and Donbas. To date, members of the Councils have been actively involved in the preparation of a draft law on mediation, amendments to the Bankruptcy Code, proposals to improve legislation on enforcement proceedings, the introduction of an electronic court, and discussions on the concept of transitional justice. The RECs act as permanent working groups that promote the implementation of reforms in accordance with the bottom-up principle: by bringing region-specific challenges and their potential solutions to the level of central authorities.