Bankruptcy cases in Ukraine when under quarantine: key considerations for creditors to take into account
The adaptive quarantine in Ukraine has officially been extended until 28 February 2021 (unless a further extension takes place).
Meanwhile, Ukraine has finally introduced the widely discussed temporary changes to the Bankruptcy Code of Ukraine, which aimed to provide protections for businesses in distress during the COVID-19 pandemic. Those temporary measures entered into force on 17 October 2020 (Law of Ukraine No.728-IX dd. 18 June 2020) and impose certain restrictions which should be considered by creditors when dealing with Ukrainian bankruptcy proceedings.
Key considerations to remember:
- During the quarantine and 90 days after its termination (i.e. till 29 May 2021), creditors are prohibited from initiating a bankruptcy case against the debtor based on claims which matured as of 12 March 2020.
- The duty of the debtor (director) to file for bankruptcy within 1 month as of the date of occurrence of a ‘threat of insolvency’ (i.e. when paying 1 or more creditors shall cause the debtor’s inability to pay other creditors in full), at the threat of triggering joint and several liability for the director’s failure to act accordingly, may be ‘excused’ for the quarantine period and 90 days thereafter, should the debtor be able to prove that such a failure to act in a timely fashion under the BCU was caused by the spread of COVID-19 and/or by anti-COVID-19 temporary measures.
- A bankruptcy practitioner may be released from liability for his/her failure to exercise his/her duties under the BCU within the quarantine period, should he/she prove that the quarantine measures impeded him/her from acting accordingly, and notify the respective creditors (CC and secured creditors) thereof.