Ukraine suspends debt collection by Russian creditors and modifies enforcement procedures

Ukraine

On 15 March 2022, the Ukrainian parliament passed Law of Ukraine No. 7154 “On Amendments to the Law of Ukraine “On Enforcement Proceedings” that suspends debt collection under Ukrainian enforcement proceedings by Russian creditors.

Until the law on the settlement of relations with persons associated with Russia enters into force (parliament has not yet registered or passed this law), enforcement actions by the following creditors will be suspended:

  • the Russian Federation;
  • citizens of the Russian Federation;
  • legal entities established and registered under the laws of the Russian Federation; 
  • legal entities established and registered under the laws of Ukraine, which have ultimate beneficial owners, members or shareholders owning 10% of shares or more in authorised capital that are linked to the Russian Federation, a Russian citizen, or a legal entity established and registered under Russian law.

Two categories of persons to whom these restrictions would not apply include:

  • citizens of the Russian Federation residing in Ukraine on legal grounds; and
  • legal entities established and registered under the laws of Ukraine, which have ultimate beneficial owners, members, or participants (shareholders) that are exclusively Russian citizens legally residing in Ukraine or are Ukrainian and Russian citizens legally residing in Ukraine.

The law prohibits initiating and conducting enforcement proceedings in the regions of Ukraine, which are temporarily occupied by the Russian Federation.

For a period of martial law in Ukraine and until its termination or abolition, the law also provides that:

  • terms of the enforcement proceedings have been interrupted and will be resumed from the date of termination or abolition of martial law;
  • legal entities that are debtors may carry out expenditure transactions through their attached banking accounts in enforcement proceedings for the purpose of paying wages (up to EUR 1,000 per month per employee), taxes, fees and state social insurance payments;
  • individuals may carry out expenditure transactions through their attached banking accounts if the sum of the writ of execution (in accordance with which the account was attached) does not exceed UAH 100,000 (EUR 3,000);
  • foreclosure proceedings regarding salary, pension, scholarship and other income of the debtors (excluding collection of alimony and proceedings against citizens of the Russian Federation) are suspended.

The above-mentioned provisions of the law will come into effect once the law is signed by the President of Ukraine and officially published.

For more information on the enforcement proceedings and mode of operations under martial law in Ukraine, contact your regular CMS advisor or local CMS experts: Olga Shenk, Maria Orlyk.

Legislation: Draft Law of Ukraine No. 7154 “On Amendments to the Law of Ukraine “On Enforcement Proceedings”