Bankruptcy during quarantine

The Verkhovna Rada of Ukraine adopted Law No. 3322 “On Amendments to the Bankruptcy Procedure Code of Ukraine to Prevent Bankruptcy Abuses for the Period of Measures Aimed at Preventing the Occurrence and Spread of Acute Respiratory Disease COVID-19”

This Section of the Code “Final and Transitional Provisions” of the Code has been supplemented by paragraph 12 as follows:

It is to be established that temporarily, for the period of quarantine set up by the Cabinet of Ministers of Ukraine with a view to prevent the spread of acute respiratory disease COVID-19:

  • The meeting and the creditors’ committee may be held remotely by videoconference, provided that the creditor representatives are properly identified and verified. The video recording of the videoconference is a supplement to the minutes of the meeting and the creditors’  The minutes of the meeting or the creditors’ committee shall be signed by the arbitral trustee alone or by the creditor elected by the chairman of the meeting or the creditors’ committee – in case they are held in the absence of the arbitration trustee;
  • The meeting and the creditors’ committee may be conducted by means of a polling, provided that the credentials of the creditors’ representatives are properly identified and verified. The arbitration trustee or creditor elected by the chairman of the meeting or the creditors ‘committee – in the absence of the trustee, sends a request to all participants in the meeting of  creditors or members of the creditors’ committee of the debtor, the request containing a draft decision on the proposed issue (issues).  Such a request shall indicate the address to which the creditors shall send their reply with the decision taken (for, against or withheld) and the period within which they shall do so.  Requests are sent to creditors to the e-mail addresses specified by creditors in statements with claims laid against the debtor, statements on the merits or statements on procedural issues.  If the lender does not have an e-mail address, the request can be sent by ordinary   In this case, within the term of the polling the time of receipt of postal correspondence shall be taken into account.  The creditor shall send his decision to the arbitral trustee within the period specified in the request.  The decision of the creditor shall be unconditional.  Answers sent after the deadline, or those whose content does not allow to establish the will of the creditor on the issue raised by the arbitral trustee, are not taken into account when counting the results of polling on this issue.  The arbitration trustee or creditor elected by the chairman of the meeting or the creditors’ committee – in case of their absence in the absence of the arbitration trustee, is obliged to present the decision in the form of a protocol, attach copies of answers of all creditors who took part in polling and send to all participants.  creditors or members of the creditors’ committee in the manner prescribed for sending inquiries, within 10 days from the date of expiration of the period for acceptance of responses from creditors.  The date of the decision is considered to be the last day of the period during which the participants had to send their answers to the initiator of the written decision.  The creditor’s response sent by e-mail shall be certified by an electronic signature;
  • The arbitral trustee shall be released from liability for failure to perform the actions provided for in this Code, if they cannot be committed under the quarantine established by the Cabinet of Ministers of Ukraine to prevent the spread of acute respiratory disease COVID-19, if the arbitral trustee cannot prove they are committed under quarantine, as well as subject to notification of creditors elected to the creditors’ committee and creditors whose claims are secured by the debtor’s property;
  • The terms of the preliminary court hearing in the bankruptcy case (insolvency), application within the bankruptcy proceedings (insolvency) for invalidation of transactions committed by the debtor, the moratorium on satisfaction of creditors’ claims, announcement of the first, repeated and / or the second re-auction, implementation of the plan of rehabilitation or restructuring of the debtor’s debts, the procedure of disposition of property, liquidation, restructuring of the debtor’s debts and repayment of the debtor’s debts, shall be extended.

It is also established that temporarily, for the period of quarantine set up by the Cabinet of Ministers of Ukraine with a view to prevent the spread of acute respiratory disease COVID-19, and for 90 days from the date of abolition of the quarantine:

  • It is not allowed to open bankruptcy proceedings against debtors – legal entities at the request of creditors on claims against the debtor, which arose from March 12, 2020;
  • The period specified in part six of Article 34 of this Code is extended, if the debtor proves that the inability to comply with the one-month deadline for filing for bankruptcy was caused by the spread of acute respiratory disease COVID-19 and / or measures aimed at combatting the spread of this disease;
  • The Committee of Creditors and the secured creditor (in respect of the property that is the subject of collateral) have the right to decide to suspend holding the auctions for the sale of the debtor’s property. If the creditors’ committee and / or the secured creditor (in respect of the property that is the subject of collateral) makes such a decision, the costs of preserving and maintaining the bankrupt’s property and all risks of losing or reducing its value shall be borne by the creditors who made such a decision;
  • The accrual of interest on the debtor’s obligations to creditors, who have been restructured by a financial recovery plan that deals with restructuring the debtor’s debts, is stopped. Penalties for non-performance of such obligations by the debtor are not accrued.  Overdue liabilities provided for in the debtor’s debt recovery or restructuring plan shall be deferred for the term of the debtor’s debts recovery or restructuring plan. “

 

 

Publications 3 August, 2020

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