Legal Hotline | Digest of the main legislative changes in Ukraine 29.10.2020

Amendments to the Code on Bankruptcy Proceedings came into force

Already several Laws of Ukraine amending the Code of Ukraine on Bankruptcy Proceedings came into force on October 17, 2020, in particular і) Law No. 686-ІХ dated 05/06/2020 on amending the Code and іі) Law No. 728-ІХ dated 18/06/2020 on preventing the abuse in bankruptcy sphere for the period of conducting measures aimed at preventing the emergence and spread of COVID-19 coronavirus disease.

These laws, inter alia, introduce the following amendments:

• it has been established that bankruptcy proceedings in respect of debtors — public enterprises and budgetary institutions, as well as receivership of such debtors before commencing the bankruptcy proceedings shall not be allowed;
• features of the procedure for appointing a receiver prior to the start date of functioning of the Unified Court Information and Telecommunication System have been determined. Thus, an application of the initiating creditor on bankruptcy must contain a proposal of the candidate for a receiver with the application of the receiver him/-herself on participating in the case. Should there be no such proposal and/or application, a receiver for performing the powers of asset manager or restructuring manager shall be appointed by a commercial court at its own discretion from among persons included in the Unified Register of Receivers of Ukraine by applying the currently operating automated system;
• it has been established that meetings of creditors and creditors’ committee may be held remotely in the form of video conference, provided that proper identification and verification of powers of creditors’ representatives are ensured;
• it has been established that a receiver shall be released from liability for failure to perform actions stipulated by the Code on Bankruptcy Proceedings, unless they may be performed under quarantine conditions, provided that creditors elected to the creditors’ committee and creditors whose claims are secured with a pledge of debtor’s property are notified thereof;
• for the period of quarantine set by the Cabinet of Ministers of Ukraine in order to prevent the spread of COVID-19 coronavirus disease, and within 90 days after the quarantine is cancelled:

a) it shall not be allowed to commence bankruptcy proceedings in respect of corporate debtors following an application of creditors on the claims to debtors, which emerged after March 12, 2020;

b) one-month period determined for a debtor to file an application with a commercial court for commencing the proceedings in a case shall be extended in case of insolvency threat, if the debtor proves that failure to comply with this term was caused by the spread of COVID-19 coronavirus disease and/or measures on combating the spread of this disease;

c) creditors’ committee and secured creditor may decide to terminate holding of auctions for selling the debtor’s property;

d) interest on debtor’s obligations to the creditors restructured through receivership or restructuring of debtor’s debts shall no longer be charged.

New resolution on using the “single window” mechanism for foreign economic activity has been adopted

On October 21, 2020, the Cabinet of Ministers of Ukraine adopted new Resolution No. 971 on using the “single window” mechanism for international trade.

As stated on the Government Portal, the Resolution approved the Procedure for interacting between customs applicants, their representatives, other state authorities, institutions and organizations authorized to perform authorization or control functions on the movement of goods, commercial vehicles through the customs border of Ukraine using the “single window” mechanism.

The Resolution has been adopted in order to harmonize the Procedure for using the “single window” mechanism between customs applicants, customs authorities and other state authorities with the Customs Code of Ukraine as replacement of the current procedure.

The Resolution introduces new instruments for electronic interaction using the “single window” mechanism between business, customs and other state authorities.

Approaches to forming the inspection plans of State Labor Service of Ukraine to change

The State Labor Service of Ukraine has reminded of the improvement of process for selecting business entities taking into account the risk-oriented approach for planning the control and supervision activity for 2021.

The Criteria of Risk from Carrying out Business Activity, which came into force on May 27, 2020, became the conceptual difference in the methods of determining the first priority in conducting scheduled inspection of business entities.

From now on, scheduled control measures primarily concern the employers, who meet the following criteria:

• accidents, cases of employee or person of a business entity having acute or chronic occupational diseases during the last five years preceding the scheduled visit, etc.;
• availability of higher danger objects without properly registered declaration of safety of the higher danger object;
• existing arrears with salary payment or violation of the deadlines for paying the salary;
• payment of salary to employees at the level or below the minimum salary amount established by the legislation;
• appeals from individuals concerning the violations, which infringed their rights, legitimate interests, caused damage to their life or health, environment or safety of the state, however, no unscheduled state supervision (control) measures were taken due to the lack of grounds for taking them, etc.

Planing of supervision activity based on the specified criteria must ensure targeted inspections of business entities primarily classified as high level of risk in a relevant state supervision (control) area.