With the aim of meeting the requirements of the Law of Ukraine, the National Bank of Ukraine has approved a framework agreement for financial restructuring.
The framework agreement shall establisg a cooperative framework for the coordination of actions by contractual parties in financial restructuring procedures.
In accordance with the approved document, the parties to this Agreement shall be:
- banks and no-banking financial institutions and
- the Deposit Guarantee Fund
The coordination of actions between shall be based on the rule of law, integrity, rationality, concerted actions, equality of rights, honest partnership, the protection of each other's interests, prompt response, openness and transparency of cooperation, information sharing and confidentiality preservation, as well as duly fulfilment of contractual obligations.
Under the Framework Agreement, the parties shall:
- maintain business contacts, hold consultations and meetings on a regular basis;
- put efforts to make good progress in financial restructuring;
- exchange information between each other;
- rollover the debtor’s debt with fresh financing according to the restructuring plan;
- take the necessary measures to ensure the protection and preservation of collateral securing the debt;
- duly comply with the provisions of the Framework Agreement and implement decisions adopted by the Steering Committee of financial institutions.
The coordination of actions between parties shall not be limited to complying with the principles underlying the Framework Agreement.
Pursuant to the Framework Agreement, the award of the Arbitration is final and binding upon all parties. However, each party to the agreement shall have the right to unilaterally withdraw from the agreement. To do this, it is necessary to send written notice to the NBU within 30 days of the date of refusal.
Click here to read the text of the Framework Agreement.
The NBU plans to publish information on the parties to the Framework Agreement that have joined this agreement or withdrawn from it.
For reference
The Law of Ukraine On Financial Restructuring adopted on 14 June 2016 is intended to create an efficient out-of-court settlement mechanism to settle disputes between creditors and enterprises over non-performing debt. 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. 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.
This law is temporary and shall remain in effect for three years from the date of its entry into effect. і.