Analysis of the Draft Law:
Greetings. As a lawyer with many years of experience, I have prepared for you a detailed analysis of this draft Law, which is aimed at the systemic reform of the bankruptcy institution in Ukraine.
### 1. Essence of the Draft Law
This draft law introduces a special simplified mechanism for bankruptcy and insolvency proceedings for micro- and small-sized business entities. The main objective is to accelerate liquidation procedures and minimize costs for businesses through automation and the limitation of consideration timelines. In addition, the document establishes clear specifics regarding the bankruptcy of state-owned enterprises and companies for which a decision on privatization has been made. The draft law also expands the access of insolvency practitioners (arbitration managers) to state registers for more effective performance of their functions.
### 2. Structure of the Project and Key Changes
The project introduces comprehensive amendments to the Code of Ukraine on Bankruptcy Procedures (CUBP) and a number of related laws:
* **Introduction of “Book Six” to the CUBP:** This is a key change that creates a separate chapter for simplified proceedings. It regulates in detail the access criteria, the specifics of filing an application, the procedure for appointing a liquidator, and the mechanism for closing a case.
* **Optimization of terminology:** The definition of preventive restructuring has been clarified, and the criteria for micro- and small-sized business entities have been clearly distinguished.
* **Specifics for the public sector:** Amendments have been made to the Law “On Privatization of State and Municipal Property,” limiting the possibility of initiating bankruptcy proceedings against facilities being prepared for privatization (a moratorium of 12-24 months is established).
* **Digitalization of access:** Insolvency practitioners are granted direct free access to information from the Unified State Register of Legal Entities, the State Register of Movable Property Encumbrances, and the State Land Cadastre.
### 3. Important Provisions for Stakeholders
These changes will significantly affect various groups of persons:
* **For business (SMEs):** A simplified and faster path to market exit via bankruptcy procedures is being introduced. Specifically, a maximum duration for proceedings is set at 180 days, which is a significant step toward cost optimization. However, debtors must meet strict criteria (absence of wage arrears, annual registration, etc.).
* **For legislators and experts:** The project creates a tool for balancing the interests of creditors and debtors, in particular through the introduction of the right to a “fresh start” in a simplified order, provided the debtor acts in good faith.
* **For creditors:** An important provision is the “tacit consent” rule: if a creditor does not appear at a meeting, they are considered to have supported the restructuring plan. This significantly improves procedural manageability.
* **For insolvency practitioners:** Bureaucratic barriers to obtaining information are removed. Direct access to registers will allow for faster formation of the liquidation estate and verification of the debtor’s activity.
* **For government bodies:** A strict link has been established between privatization processes and bankruptcy procedures, aimed at preventing the use of bankruptcy as an instrument to disrupt the privatization of state property.
Overall, the project shifts the focus toward economic efficiency and procedural speed, which is typical for modern European approaches to resolving insolvency issues.
Analysis of the Explanatory Note:
Greetings. As a specialist with 15 years of experience in economic law, I have analyzed this draft law. It is an important step toward cleaning up the market and bringing our procedures into line with European standards. Here is a concise analysis for your publication.
### 1. Essence of the Draft Law
The draft law proposes the introduction of a simplified bankruptcy procedure for micro- and small businesses, limiting its duration to 180 days. In addition, the document establishes clear rules for interaction between the processes of bankruptcy and the privatization of state-owned enterprises, prioritizing privatization to attract investment.
### 2. Reasons and Necessity of Adoption
The author of the explanatory note highlights three key problems that require immediate resolution:
* **Inefficiency of the current system:** Currently, bankruptcy procedures for small companies are too expensive and lengthy, resulting in meager payouts for creditors (about 9 cents on the dollar).
* **International obligations:** Ukraine must adapt its legislation to EU Directive 2019/1023 and UNCITRAL recommendations, which require preventive restructuring and an easier market exit for small businesses.
* **”Conflict” between privatization and bankruptcy:** Currently, the lack of coordination between these processes “freezes” the assets of state-owned enterprises that could be effectively privatized but instead remain in a state of legal uncertainty for years.
### 3. Main Consequences for Key Groups
If this law is passed, the following shifts should be expected:
* **For business (micro and small):** The procedure will become more accessible. Reducing litigation costs and insolvency practitioner fees will allow entrepreneurs to “close” a hopeless business faster without accumulating debt, which is a sign of a civilized market.
* **For creditors:** The introduction of the “presumption of consent” principle will accelerate decision-making, and the establishment of clear deadlines (up to 180 days) will minimize the risks of asset stripping by the debtor.
* **For the state:** A clear priority of privatization over bankruptcy will allow for faster sales of state assets, excluding situations where the bankruptcy procedure is used to sabotage privatization processes.
* **For experts and legal professionals:** This is a substantial update to the Code on Bankruptcy Procedures, which will reduce the administrative burden on courts and increase the transparency of liquidation procedures.
Overall, this is an attempt to turn the bankruptcy mechanism into an instrument of real reorganization and economic recovery, rather than just a “graveyard” for companies. The only question is how effectively the safeguards against fraudulent schemes, which the authors claim exist, will work in practice.
Analysis of Other Documents:
Greetings. As a lawyer with 15 years of experience, I have analyzed the provided documents regarding Draft Law No. 15024. Below is a structured analysis for your material.
### 1. Author’s Position and Support for the Project
The author of the project, Member of Parliament Oleksii Movchan, and a group of deputies are the initiators of introducing simplified bankruptcy procedures for micro- and small businesses, as well as regulating bankruptcy issues for state-owned enterprises during privatization. Their position is that there is a need to modernize the Code of Ukraine on Bankruptcy Procedures (CUBP) to accelerate the market exit of insolvent enterprises or their financial recovery, which complies with Ukraine’s European integration obligations (in particular, EU Directive 2019/1023).
### 2. Main Provisions of the Draft Law
For businesses, experts, and citizens, the following novelties are most important:
* **Simplified proceedings for micro- and small businesses:** The project introduces a new “Book Six” to the CUBP. This will allow debtors who meet certain criteria (up to 10/50 employees and revenue up to EUR 2/10 million) to undergo the liquidation or debt repayment procedure in an accelerated mode — **no more than 180 days**.
* **Preventive restructuring:** Conditions for debtors (micro- and small enterprises) are eased — the requirement of an “enhanced standard of proof” for the viability of the plan is canceled, which significantly simplifies the possibility of “resuscitating” a business without declaring full bankruptcy.
* **Protection of privatization:** An important provision for the public sector: for 12-24 months after the decision on the privatization of a state-owned enterprise is made, bankruptcy proceedings cannot be initiated against it, and existing cases must be closed. This creates “immunity” for facilities being prepared for sale.
* **Digitalization and access:** Mandatory use of the Unified Judicial Information and Communication System is introduced. Insolvency practitioners receive simplified access to state registers (land cadastre, encumbrances), which should reduce the time spent collecting documents, although experts point to risks regarding the confidentiality of third-party data.
* **Change in court fee rates:** For creditors initiating simplified proceedings, it is proposed to reduce the court fee to 5 subsistence minimums (currently 10), which stimulates prompt filing with the court.
**Summary for the media:** The draft law is an ambitious attempt to make bankruptcy not a “death sentence” for small business, but an effective tool for market cleanup. However, the relevant committees (Budget, Digital Transformation, and the Main Scientific-Expert Department) point to the need for technical and legal refinement, especially regarding financial justification and the alignment of terminology with other laws. The main discussion will likely revolve around the balance between the speed of the procedure and the protection of creditor rights, as well as the impact on budget revenues from privatization.
