Critical Infrastructure Enterprises: Moratorium on Bankruptcy in Ukraine

Roman Marchenko, Attorney at Law, Senior Partner, Insolvency Receiver

Source: INSOL Europe

The Verkhovna Rada of Ukraine is considering Draft Law No. 8316 on introduction of amendments to Article 8 of the Law of Ukraine On Critical Infrastructure (on the settlement of disputes, the subject matter of which is the state’s title to the state-owned critical infrastructure facilities). 

It is proposed to amend Article 90(1) of the Code of Ukraine on Bankruptcy Procedures, in particular, to add new grounds for closing the bankruptcy case. Therefore, the case is subject to closing if it is initiated in relation to economic companies that are operators of critical infrastructure, in the authorized capital of which more than 50 percent of the stakes (shares, ownership interests) are directly or indirectly owned by the state and the stakes (shares, ownership interests) of which underwent compulsory alienation during martial law, except for those liquidated by the debtor’s decision.

Also, the Final and Transitional Provisions section is supplemented with paragraphs 16 and 17 as follows:

“16. Temporarily, during the martial law and within two years after its termination or cancellation, it is not allowed to initiate proceedings in the case of bankruptcy of economic companies that are operators of critical infrastructure, in the authorized capital of which more than 50 percent of stakes (shares, ownership interests) are directly or indirectly owned by the state and the stakes (shares, ownership interests) which underwent compulsory alienation during martial law, except for those liquidated by the decision of the owner. 

17. Temporarily, during the martial law and within two years after its termination or cancellation, proceedings initiated in the case of bankruptcy of economic companies that are operators of critical infrastructure, in the authorized capital of which more than 50 percent of stakes (shares, ownership interests) are directly or indirectly owned by the state and the stakes (shares, ownership interests) which underwent compulsory alienation  during martial law, except for those liquidated by the decision of the owner, are subject to closure at all stages of bankruptcy proceedings (before and after the debtor is declared bankrupt).”

According to the conclusion of the Committee of the Verkhovna Rada of Ukraine on the National Security, Defense and Intelligence dated 1 May 2023, the Committee recommends the adoption of the Draft Law No. 8316 in the second reading and as a whole.