Committee on Economic Policy held international conference reforming bankruptcy system in Ukraine

The Committee on Economic Policy held the International Conference Reforming the Bankruptcy System in Ukraine in Light of Best Global Practices – Momentum for Investment Boom and Economic Breakthrough"

Original in Ukrainian: Verkhovna Rada

When opening the event, the chairman of the Committee on Economic Policy Andrii Ivanchuk noted that the Verkhovna Rada had adopted in the first reading the Code of Ukraine on Bankruptcy Procedures. A working group was set up under the Committee; more than 1300 amendments to the draft law were submitted at the stage of second reading by various legislators, and the majority of them were taken into account. The Chairman of the Committee noted that the draft was ready for the second reading, but it was decided not to rush because any law needs further implementation. “We want as many experts and specialists as possible to look into what we developed so that we could complete our work,” said Ivanchuk. "I would like to finalize the bill, based on the results of our today’s conference, in a week or two. This is my plan, I think that it is absolutely feasible – in the first plenary week of October we will approve the final version of the Code at the Committee meeting. And in the second plenary week of October, we will manage to pass the bill in the session hall”, said the Chairman of the Committee on Economic Policy.

“The bill being adopted, it will significantly improve our position in the Doing Business ranking, both in terms of restoring solvency, and in the overall ranking, which would translate in the better investment climate – the image of our country is at the stake,” said A. Ivanchuk while also adding that that was the reason of paying so much attention to that bill”. To sum up, the Chairman of the Committee on Economic Policy thanked all national and international experts who joined the drafting process, which resulted in significant changes in the document and more balanced approach so far as applied of legal drafting techniques.

In turn, Minister of Justice Pavlo Petrenko has drawn attention of those present that today`s event is not a simple discussion: “This measure concerns millions of Ukrainian enterprises, since there are some 3 million entrepreneurs operating in Ukraine. It concerns both – the financial situation and coping with critical life problems of an individual through the lawful instruments that the state will provide through the Code. “This problem has not popped up out of thin air; it has been growing for many years. There are several indicators that distinguish Ukraine from among other civilized countries. If we talk about the average duration of bankruptcy procedures, in Ukraine, under the old legislation, it used to be some three years. In a developed jurisdiction appearing on the Doing Business ranking, it does not exceed one and a half years,” said P. Petrenko.

According to the Minister of Justice, our statistics on the cost of the bankruptcy procedure is striking. The expenses of a Ukrainian enterprise going through the bankruptcy process go up to 42% of the value of all property.” Thus, almost half of the property of the company, that decided to restore solvency, as stipulated by the old law, will be spent for technical procedures, and the bankruptcy process of the means of restoration of solvency. In well-developed jurisdictions, where the legislation has already been reformed, the cost of bankruptcy does not exceed 8-10%, "- said P. Petrenko.

The Minister of Justice pointed out for the participants that a highly competent working group had been working on this bill, including representatives of the Parliament, Government, civil society, and expert community: “This is another good example of civilized advocacy of the preparation of legislative initiatives.”

The Head of the Office of the National Investment Council under the President of Ukraine Yuliia Kovaliv mentioned in her speech that when assessing the investment climate and how the business was done in Ukraine, one often refers to the World Bank’s Doing Business ranking. “If you look at some indicators, you will see that Ukraine is in the TOP-40 countries when it comes to the opening of a business. However, if we look at the lower index, which includes the bankruptcy procedure and execution of contracts, it is one of the three worst indicators in the “Doing Business” ranking for Ukraine”, explained the Head of the Office of the National Investment Council under the President of Ukraine.

Y. Kovaliv expressed the hope that with the adoption of the Code, the updated bankruptcy procedure would enable to solve a number of key issues. In particular, it would protect the rights of creditors and, as a result, would facilitate the liberalization of crediting by banks, which would stimulate and promote the positive development of the economy as a whole. The event was attended by the top-management of the Committee on Economic Policy, central executive authorities, reputed scholars, and experts from non-governmental organizations.

The participants of the discussion focused on the prospect of introducing the individual bankruptcy, problematic issues relating to the application of the bankruptcy law, as well as seeking of international experience while working on the draft Code of Bankruptcy Procedures.