CURRENT ISSUE (January-February 2018)

In focus – Financial Restructuring

When economic growth changes into depression, it almost always means facilitation of debt restructuring across both the private and state sectors. Some high value cross-border restructurings over the last couple of years became a positive sign for restoring the confidence of international lenders.

Expert Opinion

Debt Restructuring in Ukraine from a Foreign Creditors Perspective

leksander Plotnikv

The last 4-5 years can be called the era of big cross-border debt restructuring in Ukraine, as we saw many high-profile debt restructuring projects in the private and public sectors which have established certain market practices and have provided a vector for further development of debt restructuring practice in Ukraine.

In Re

Opportunities for Investing in Non-performing Loans in Ukraine

Tetiana Mykhailenko, Anstasiya Voronova

More than half of all Ukrainian banking sector loans are currently non-performing, which makes Ukraine very attractive to NPL investors. As reported by the National Bank of Ukraine (NBU), from the beginning of November 2017, the ratio of non-performing loans (the NPLs) in Ukraine constituted 56.5% and amounted to UAH 587 billion, which is approximately EUR 18 billion. The level of NPLs in Ukraine remains higher than in any other European country, including Cyprus and Greece.

Debt to Equity in Ukraine

Vasyl Yurmnovych

A debt-to-equity swap is a refinancing deal in which a holder of debt receives an equity in exchange for cancellation of the companys contractual debt.

In Ukraine, debt-to-equity swaps are still rarely done in practice, although the Ukrainian legal society started to review the topic in 2008.

News

Deals

EVRIS has completed financial restructuring for PJSC Alfa-Bank

Dentons advised FUIB on loan restructuring

AVELLUM Ukrainian legal advisor to Deere & Company

AEQUO advised JSCB Industrialbank

Asters advised International Finance Corporation

Kinstellar Ukrainian legal counsel to ArcelorMittal Kryvyi Rih

Cases

EU Court allowed premium brands to ban sale of goods on Amazon and eBay

Court seized Kurchenkos UMH property

Lifecell appealed AMCU decision

High Court of Justice in London put end to dispute over Sky Mall

Starbucks wins trademark dispute

Global arrest of Ihor Kolomoyskyi and Gennadiy Bogolyubov assets

Draft

Draft proposes popularization of payment terminals

Amendments to the Budget Code

Law digest

Moratorium on land sales extended until 1 January 2019

Additional measures to protect agrarians from illegal takeover

Procedure for residents to bring foreign currency in cash simplified

Mechanism of selecting supervisory boards in banks regulated

Conditions of transfer to incentive based regulation for energy companies

Law on Privatization

Biznews

Energy

Subsidiary of Americas TrailStone obtained license for right to supply natural gas

Kyivenergo split into two companies

Banking & Finance

NBU refinanced PrivatBank via loan

Trade Policy

Largest free trade zone on the planet

M&A

Nestle sells Ferrero confectionary business in USA

Softbank bought stake in Uber

EU

EU approved tax havens blacklist

Public Administration

Desk audits to be computerized

AMCU

AMCU commenced case on petrol price rises

UBA News

Activities of forensic experts in Ukraine in the spotlight

The Forensic Experts Section of the Ukrainian Bar Association became a platform for discussion about the reform of forensic expert activities. Within the framework of the Section, at the turn of the year the Association held 3 events dedicated to Draft Law No. 6264 On Forensic Activity in Ukraine.

Chamber News

Members of the American Chamber of Commerce in Ukraine elected Board of Directors for 2018

On 7 December 2017 the American Chamber of Commerce in Ukraine held its Annual Ge-
neral Membership Meeting
welcoming 300+ senior level representatives of the business community,
Government officials and partners, who had a chance to network with each other, share best practices in the sectors of their businesses and catch up on the latest developments.

Cover Story

Increasing Interest

Since the economic situation provoked an increase in the amount of bad debts held by banks, corporate debtors have strongly required a mechanism to resolve debt recovery in the out-of-court procedure.
The new Law of Ukraine On Financial Restructuring is currently being examined in practice. It is expected to be the turning point for the financial sector as there is increasing interest from both borrowers and lenders.
We asked Sergii Papernyk, head of the banking and finance practice at EVRIS Law Firm, how the new rules actually work in practice.

Hot Issue

Pricing Mechanisms in M&A Deals: to Adjust or to Lock?

Tetyana Dovgn, Vitalii Mainarovych

The purchase price which a potential investor would be willing to pay to a seller for its business is an essential element of any M&A deal, and it always requires significant effort for the parties to agree how such a purchase price should be determined. This article aims to analyse the two most common mechanisms of price determination completion accounts and locked box.

Argument

Strategy for Effective Logistics in Ukraine

Viktor Dovhn

The World Bank has prepared recommendations for Ukraine on its logistics strategy, while providing an assessment of the real state of the countrys transport infrastructure. The conclusions of experts are very disappointing: the transport infrastructure is not used at full capacity, the level of services and transport networks is much lower than world standards, user costs for logistics are too high.

Global Legal Update

Freezing and Ancillary Injunctions in Cross-Border Litigation

ostintyn Likarchuk, Dnylo Volkovetskyi

Recent journalist investigations, including most recently the Paradise Papers, have reinforced the view that multi-layered and complicated corporate structures are an integral part of large Ukrainian businesses. Sophisticated parties go beyond standard corporate structuring, which is usually limited by considerations of tax efficiency and corporate governance.

Crux

Legal Digest

Over the last two months the editorial team has monitored legislative initiatives and changes that may be of particular interest for our readers. We asked legal experts to give us their hands-on comments. Particularly on our radar are Resolution No.925, which introduced amendments to some regulations governing the registration of rights to land plots and maintenance of the State Land Cadaster; Draft Law On Amending Certain Legislative Acts in the Field of Road Transport with Intent to Bring them into Line with EU Legal Norms; algorithm for automatic desk-top audits of tax reporting; the strategy for reforming the state supervision (control) system.

Of course, it is important to mention draft laws regarding the restoration of development opportunities for small and medium-sized businesses using loan financing on the territory of the Anti-Terrorist Operation and On State Property Privatization, as well as the National Bank of Ukraine Resolution that introduced the procedure for banks to open escrow accounts.

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