Micro and small businesses will be able to undergo bankruptcy proceedings faster and at lower cost. On November 11, the Verkhovna Rada adopted bill No. 15024, which introduces a separate simplified mechanism for small enterprises.

This is reported by the press service of the Verkhovna Rada of Ukraine.

The document also defines the rules for applying bankruptcy procedures to state-owned enterprises for which a privatization decision has been made.

The new rules should help entrepreneurs settle debts faster, resume operations, or wind down their activities in an orderly manner. At the same time, they should prevent abuses and the creation of shell companies to evade liability.

The law is part of Ukraine's European integration reforms. Its provisions take into account the principles of EU Directive 2019/1023 and are related to the fulfillment of obligations within the Ukraine Facility program.

Innovations for bankrupt enterprises

The law provides for a separate bankruptcy mechanism for micro- and small businesses. It must take into account the lesser financial and organizational capabilities of such companies compared to large businesses.

Among the main changes:

  • clear conditions for starting the procedure: criteria will be established that an enterprise must meet in order to use the simplified mechanism. This will also help restrict access to it for companies created for fraudulent schemes;

  • reduction of timelines: the entire procedure must not last longer than 180 days. This period will cover all stages and will not be subject to extension;

  • simpler appointment of an arbitration manager: the law defines the procedure for their appointment and powers during simplified proceedings;

  • less bureaucracy for creditors: if creditors do not raise objections within the established period, their position in certain cases will be considered as agreement to the relevant actions or decisions;

  • clear rules for all participants: the rights and obligations of the debtor and other parties will be defined. In particular, the enterprise must cooperate properly with the participants in the procedure.

    • The law separately defines the procedure for repaying debt. For this purpose, a liquidation plan is provided, which will include a list of creditors' claims, the enterprise's property, and an assessment of its value.

    Interested parties must be notified of the approved plan. The court will review it preliminarily, and in the absence of objections, the proceedings may be closed in accordance with the prescribed procedure.

    At the same time, the simplification of the procedure does not cancel guarantees for employees. They will retain the right to payment of wages and social benefits in full in accordance with the general provisions of the Code of Ukraine on Bankruptcy Procedures.

    The possibility of transitioning from one type of insolvency proceeding to another is also provided for, if there are proper grounds for this and the enterprise meets the established requirements.

    What will change for state-owned enterprises

    A separate block of changes concerns state-owned enterprises for which a privatization decision has been made.

    The draft law establishes the priority of privatization over bankruptcy proceedings. This should help avoid situations where both processes occur in parallel and prevent the efficient use of the enterprise's assets.

    To this end, a deadline for privatization will be set, during which no bankruptcy case may be opened. Safeguards against the simultaneous application of these procedures are also envisaged.

    The adopted document is expected to help entrepreneurs overcome financial difficulties more quickly or wind down operations, and subsequently return to business. For the economy, this will mean the ability to return assets and resources to circulation faster, improve payment discipline, and create conditions for preserving jobs.