Bankruptcy Moratorium: What You Need to Know

Ukrainian legislation provides for a moratorium on satisfying creditors’ claims, which serves as an effective tool for protecting the debtor. The aim is to shield the debtor from claims by creditors that arose before bankruptcy proceedings were initiated.

A moratorium is the suspension of the debtor’s obligation to fulfill monetary liabilities and obligations related to taxes and fees (mandatory payments) that were due prior to the imposition of the moratorium. It also halts enforcement actions aimed at securing the fulfillment of such obligations initiated before the moratorium took effect.

The moratorium prohibits:

• Enforcement based on executive or other documents involving property claims, including pledged assets, whether in court or out-of-court proceedings under applicable law, except where enforcement is at the stage of distributing collected funds (including proceeds from the sale of the debtor’s property) or where pledged assets are at the sale stage following the publication of a sales notice. Non-property claims are also exempt;
• Enforcement of claims covered by the moratorium;
• Accrual of penalties (fines, late fees) and application of other financial sanctions for non-fulfillment or improper fulfillment of obligations subject to the moratorium;
• Application of inflation index adjustments and interest (3% annually) on overdue monetary obligations.

Additionally, the statute of limitations is suspended for the duration of the moratorium.

The moratorium does not apply to:

• Wage payments;
• Alimony;
• Compensation for health-related damages;
• Claims of current creditors;
• Executive documents of a non-property nature;
• Other exceptions stipulated by the Bankruptcy Procedures Code of Ukraine.

When is the moratorium imposed?

The moratorium on satisfying creditors’ claims is imposed simultaneously with the opening of bankruptcy proceedings, as stated in the commercial court’s ruling. This ruling serves as the basis for suspending enforcement actions. The asset manager notifies the relevant state enforcement authority or private executor managing the enforcement case.

When does the moratorium end?

The moratorium ends on the date the bankruptcy case is closed.