NBU, Finance Ministry initiates draft law on financial restructuring of companies' loans

"This concerns voluntarily restructuring of bad debts of corporate borrowers… It is proposed that the off-court settling of bad debts is legislated for the interim period of next three years," Deputy Finance Minister Artem Shevalev said at a presentation of the draft law for journalists at the NBU in Kyiv on Wednesday. He said that the goal of the initiative is to accelerate the restoration of the financial and corporate sectors using the financial and operating restructuring of bad credits, retain economically viable enterprises and jobs in the real economic sector, accelerate the settling of the uncollectable debts in the banking sector, which would allow banks to resume crediting of new borrowers in the real economic sector, create a reliable and effective mechanisms for informal settling of bad debts issue between creditors and companies. Shevalev added that potentially economically viable companies-debtors, including municipal and public enterprises, could take part in this restructuring. The possibility of returning the companies to the successful economic operations if the debt problem is settled would be assessed before the restructuring process. "The mechanism for defining vitality will be transparent; independent experts and leading audit companies will be involved," he said. He said that the restructuring procedure could start if there are at least three financial institutions, which are parties of the market agreement, or one financial institution that has at least 25% of the debt. If temporary administration is introduced in the bank-creditor, the Individuals' Deposit Guarantee Fund would present the creditor in the restructuring procedure. If the company-debtor and the bank are affiliated, they cannot take part in the restructuring process simultaneously. Shevalev said that the coordinator of the process will be a group of experts, consisting of representatives of the NBU, Finance Ministry, Economic Development and Trade Ministry and Justice Ministry. Deputy NBU Head Vladyslav Rashkovan said that as of September 1, 2015, the credit portfolio of banks totaled around UAH 930 billion, including UAH 761.5 billion of credits issued to corporate clients or 82%. The share of overdue debt of corporate clients of the banks' credit portfolio was 17%, he said.