Dispute Resolution |


He was born in Zaporizhzhya in 1979. He studied international law at Harvard Law School (1999), and earned a PhD in Law (Institute of International Relations at Taras Shevchenko National University of Kyiv) in 2003. From 2009 he was Executive Chief Legal Officer of the Generali Group in Ukraine. In 2012 he joined the team at Integrites ILF, where he headed the practice of judicial settlement of disputes (partner from 2015). In 2017 he became equity partner of the Dynasty Law Firm, heading the Kyiv office. He is an expert in bankruptcy, restructuring, complex penalties, disputes with state authorities, IP and support of investment projects. He is the winner of The Clients Choice Awards international rating in the "Litigation" category, he was singled out by The Legal 500 international rating, the Legal Practice rating as a leading specialist in bankruptcy and in dispute resolution.

Peaceful wave

"Both a debtor and creditors are increasingly aware of the feasibility to resolve a situation peacefully and are inclined towards business decisions"

— How did the coming into  force of the law on restructuring affect the balance of bankruptcies and debt restructuring?

— These procedures do not have a common purpose in Ukraine. For financial institutions bankruptcy is traditionally a way of collection, for business until 2008 it was a way of acquiring assets of interest, and after 2008 it is a way to block collection. The procedures for restoring the debtor's financial condition are even formally applied extremely rarely. The following ratio became classical: less than 200 rehabilitations to 3,000 proceedings. In the light of this, the average rate of satisfaction of creditors claims, which is under 9%, seems to be a logical result, and the recovery of debtor's solvency is an exception to a series of unscientific fiction.

Unfortunately, the procedure for financial restructuring is hardly viable at present: eight proceedings have been implemented in eight months since the Secretariat was formed. This is between UAH 1.5 billion and UAH 582 billion of an officially recognized problem, while the official forecast was to reach around UAH 200 billion. Compare with the 1,524 new bankruptcies for 2016 and the question regarding correlation of procedures will disappear.

Clearly, the number of restructurings will increase in the future, but even with the maximum involvement of state institutions it is unlikely to achieve the stated figure of 70%.


— What new legal positions were formed by the courts when considering bankruptcy cases? What is their impact on law-enforcement practice?

— The ruling adopted by the Supreme Court of Ukraine (SCU) dated 25 May, 2017 in case No. 925/2063/13 can be described as forming a practice, by which the court confirmed that the list of court decisions subject to cassation appeal is exhaustive, thereby not only eliminating contradictory practice of the Supreme Economic Court of Ukraine (SECU) on this issue, but also confirming the refusal of the approaches outlined by it on 19 October, 2016 in case No. 3-1165гс15.

The ruling adopted by SECU dated 19 January, 2017 in case No. 916/1950/16 will also be no less important for changing the practice in appealing decisions on bankruptcy cases: the court recognized secured creditors as participants in the bankruptcy proceedings from the moment the proceeding is commenced, thereby changing the previous practice of acquiring such status only after the court admitted the creditor's claims.


— Will the new judges of the Supreme Court continue the practice developed by the SCU and SECU, or is it worth expecting changes?

— Technical innovations of procedural legislation enable such changes to be made. However, judicial practice resistant to external factors and predictable is something not only expected of the Supreme Court by lawyers, but is also a key factor in stabilizing the economy.

— What impact will the new procedural legislation have on the institution of bankruptcy?

— The above example of the SCU’s position clearly confirms the priority of special rules over general rules of the economic process. As a result of this position, the impact should not be large-scale. However, the practice will not be able to ignore principal innovations of a general nature: change in the cassation appeal procedure, opportunity to leave the statement of claim without action, change in the procedure for conducting examination, submission of documents in electronic form — all this cannot but make adjustments to bankruptcy proceedings.


— Are there any alternatives to solving bad debt? What determines the choice of one or another method?

— A debtor and creditors can together look for ways, considering various options of debt conversion into corporate rights, or by jointly searching for alternative guarantees under the "debt restructuring in exchange for increasing amount of securing obligations" Scheme. This is the way to interact with "white business" creditors.

It is now fashionable to discuss the growing role of mediation, and there may be certain parallels with financial restructuring. For many subjects of disputes this corresponds to reality. However, loan debt running into tens and hundreds of millions of dollars is not the case when it is possible to do without a clear plan, documenting obligations and legal procedures.

In situations when debtors deliberately evade their obligations, creditors search for alternative assets, block the business associated with beneficiaries, examine the grounds for initiating criminal proceedings against a debtor and other mechanisms of legal impact. Implementation of such actions returns negotiations to a constructive direction.

A debtor also may be the client of lawyers who own such instruments. In such an event, the understanding of directions to be counteracted enables the taking of preparatory measures, at the end of which the creditors are faced with a choice: to either accept a proposal for restructuring as drafted by the debtor, or to be involved in lengthy court proceedings, the effectiveness of which cannot be predicted. In some cases, such actions become the only way to keep a business, whose financial model was miscalculated in the pre-crisis period. Fortunately, both the debtor and creditors are increasingly aware of the feasibility to resolve a situation peacefully and are inclined towards business decisions.


— What problem issues arise in the course of restructuring?

— According to official data, four restructuring procedures have been completed. In each instance, the procedure was carried out with the involvement of only one creditor, thereby avoiding the need to deal with controversial situations. However, these examples are close to the "ideal gas" in physics. In general, financial restructuring in accordance with the 2016 Law under conditions close to life ones is not such a simple process.

In many bankruptcies there is no creditor whose claims amount to more than 50% of the total amount of debt. Accordingly, the issue of consensus will be one of the key issues. Equally debatable will be the application of a moratorium to the claims of persons disagreeing with the initiation of the procedure, and the situation derived from it with the initiation of a bankruptcy case. Obtaining the consent of a qualified majority to complete the procedure is also a daunting task. In the process of developing practice in application of the law, complicated situations connected with guarantors will also occur.

However, this does not mean that such a tool is not in demand or cannot be effective: it is necessary to adequately assess the terms of its application and not to idealize the impossibility of its use for manipulation, because although directly affiliated creditors are not allowed to adopt decisions within the procedure, the application of a number of terms of a general nature enables receipt of a 180-day pause in recovery procedures, which is critical for the period of declaring agreements invalid, deliberately worsening the debtor's financial condition.


— Is it possible to assert that the peak of bankruptcy has already passed?

— I would like to believe that the number of insolvency cases will decrease. But so far there are no grounds to believe that the value of lawyers in the field of bankruptcy and restructuring will fall.