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

“A developed legal mechanism for the restructuring of non-performing 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 non-performing loans and channel their released funds toward resuming lending and boosting the economy; and
• Enable companies to avert the risk of bankruptcy and give them enough 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 resolution 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 to 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.

Twenty 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.