OREANDA-NEWS. The National Bank of Ukraine welcomes the decision by the Parliamentary Committee on Finance and Banking to recommend that parliament adopt  Draft Law No. 3555  on Financial Restructuring in principle.

“The developed legal mechanism for  restructuring of nonperforming loans will help accelerate the recovery of the financial and corporate sectors. This draft law is a structural benchmark set by the IMF program and one of the objectives set out in the Comprehensive Program of Financial Market Development of Ukraine until 2020. Therefore, we hope that parliament will adopt it,” said NBU Deputy Governor, Mr Yakiv Smolii.

The Draft Law On Financial Restructuring is intended, inter alia, to:

  • Address the legacy of a substantial amount of non-performing loans and the risks of going bankrupt and terminating business operations due to temporary liquidity problems faced by potentially viable  enterprises to enable them return to sound financial performance;
  • Enable banks to reduce the amount of nonperforming loans and channel the released funds toward resuming lending and boosting the economy; and
  • Enable companies to avert the risk of bankruptcy and  give them a breathing space to return to solvency, thus allowing Ukrainian citizens to keep their jobs and creating more jobs in the economy.

Draft Law No. 3555 establishes a reliable and effective legislative framework for informal workouts of bad debt to settle disputes between creditors enterprises.  The financial restructuring procedure  provides for voluntary rather than obligatory participation of all companies. Debts shall be restructured based on terms agreed by all parties involved. 

This draft law was developed by the NBU and the Ministry of Finance of Ukraine with technical assistance from the European Bank for reconstruction and Development and the World Bank. The draft law was submitted to the Cabinet of Ministers of Ukraine for approval and registered in parliament on 30 November 2015.

20 draft laws required for advancing financial sector reforms are pending in parliament.  These include strategically important draft laws pertaining to  the protection of creditors and financial services consumers' rights, financial restructuring of corporate debts, consolidation of the state regulation of financial services markets functions, as well as anti-money laundering draft laws