Hungary – Insolvency Framework Reform
In 2019, the EBRD launched a project with DG REFORM aimed at improving the legislative framework governing bankruptcy proceedings and restructuring in Hungary. The project was launched to assist the Ministry of Justice in a significant reform of the 1991 Bankruptcy Law and by-laws, including transposition of new EU Directive 2019/1023 on preventive restructuring frameworks. The project was carried out in cooperation with DG REFORM and a team of international and national experts led by CMS Hungary and was completed in late 2020. It is a continuation of earlier work and analysis performed by the Legal Transition Team for the Hungarian Central Bank on legal, tax and regulatory obstacles to the resolution of non-performing loans.
Latvia – Debt Restructuring Framework
The EBRD Legal Transition Team began working with the Ministry of Justice and DG REFORM in September 2019 on a project aimed at strengthening support for debt restructuring. The team, including representatives of the EBRD Legal Transition Team, the Ministry of Justice, the European Commission’s DG REFORM and a team of experts led by PwC Latvia, has analysed practical and legislative implementation issues hindering debt restructuring and has proposed a number of recommendations in a report to the Ministry of Justice, in line with the EU Directive 2019/1023 on preventive restructuring frameworks, to encourage businesses to restructure their debts at an early stage. As part of the project, the Ministry has published Guidelines on how to successfully solve business debt problems and has conducted a webinar presenting the Guidelines. Training activities in debt restructuring and cross-border insolvency are ongoing and will be concluded by the end of March 2021.
Armenia – New Insolvency Court and judicial training
In 2019 the EBRD Legal Transition Team began working with the Supreme Judicial Council of Armenia, the International Development Law Organisation (IDLO) and experts from KPMG Armenia on the preparation of an Action Plan for maximising the operational performance of a new specialist Insolvency Court established in December 2018. The Action Plan was finalised in early 2020 and support is ongoing to assist the Insolvency Court with its implementation. The Legal Transition Team and IDLO have designed an innovative online training programme on international and domestic insolvency law matters for Insolvency Court and higher instance judges which will be launched in the coming months.
Armenia – Insolvency reform and training
The EBRD has been working with the Ministry of Justice of Armenia on reforms to improve the insolvency framework and its implementation with respect to insolvency practitioners. Important amendments were introduced in December 2019, which increased the Ministry’s regulatory powers. The EBRD is working on a programme for training of insolvency practitioners, which will build on the online training programme for judges and contain insolvency practitioner specific materials.
Croatia – Insolvency Practitioners
In early 2020, the EBRD Legal Transition Team completed a project, in cooperation with DG REFORM and country experts Mamić Perić Reberski Rimac Law Firm and KPMG Croatia d.o.o., to strengthen the insolvency practitioner profession in Croatia. The project outcomes included a gap analysis of the existing regulatory system for insolvency practitioners and a number of recommendations on improvement of the system, including in areas related to training and continuing professional development. On the basis of these findings, the team developed a training methodology for insolvency practitioners and delivered legal and financial training to 59 insolvency practitioners and seven trainers for insolvency practitioners on five new topics, including financial and market analysis for financial and operational restructuring plans. These topics have been integrated into the Training Academy’s new 2020-2021 training curriculum.
Croatia – State-owned Enterprise Restructuring
At the request of the Ministry of State Assets, the EBRD Legal Transition Team, in cooperation with experts KPMG Croatia d.o.o. and Nestor Advisors Ltd. launched a project with DG REFORM aimed at establishing a framework for the preparation and implementation of restructuring plans and financial and operational improvement plans (FOPIP) for State-owned Enterprises (SOEs) in financial difficulty. The project, which completed in early 2020, included recommendations and guidelines for SOEs and the Ministry. The guidelines are supported by practical Excel templates for the relevant government ministries and SOEs and an Early Warning System to alert the stakeholders to the need to take early action and to facilitate monitoring, as well as FOPIP and restructuring dashboards to produce the necessary information for implementation of such plans. An article published on Law in transition 2020 provides some further insights into this project.
Greece – Framework for Insolvency Practitioners
In 2019, the EBRD launched a project with DG REFORM aimed at strengthening the framework for insolvency practitioners in Greece. This followed earlier Legal Transition Team’s assistance to the Greek authorities in 2015, which resulted in the introduction of Presidential Decree No. 133/2016 and examination and licensing requirements for insolvency practitioners. The experts at Platis - Anastassiadis & Associates Law Partnership and team prepared an assessment of the existing regulatory framework with recommendations for the areas that need to be standardised, coordinated or strengthened. The project also involved drafting specific amendments to primary legislation and a Ministerial Decision on training of the insolvency practitioners to implement the recommendations. Finally, the project laid the foundation for an insolvency practitioner Training Handbook by drafting chapters on Accounting Principles and Corporate Law for training purposes.
Cyprus – Framework for Insolvency Practitioners
The EBRD Legal Transition Team launched a technical cooperation Project in 2018 with the Cypriot Ministry of Energy, Commerce, Industry and Tourism and DG REFORM, in cooperation with experts from EY Cyprus, to strengthen the framework and the capacity of insolvency practitioners, which concluded in 2019. The project addressed the lack of coordination between the three separate regulatory bodies for insolvency and restructuring practitioners in Cyprus and identified areas to be strengthened. This included design and implementation of a training methodology and framework for continuing professional development, as well as the delivery of training to 124 insolvency practitioners and future trainers in the country.
Cyprus – Implementing insolvency and restructuring processes
The Legal Transition Team (“LTT”) completed a technical cooperation project with the Cypriot authorities, which resulted in an Action Plan - approved by the Government of Cyprus in June 2018 - to improve the efficiency of the operations of the Insolvency Service. The Insolvency Service oversees all insolvency procedures, including the licencing and supervision of certain insolvency practitioners. The first phase of the Action Plan, which involves a new organisational structure for the Insolvency Service and the standardisation and modernisation of internal procedures, is in the process of being implemented.
Ukraine - Support for the Restructuring of Ukraine’s Financial Sector
The National Bank of Ukraine and the Ministry of Finance requested the EBRD’s support in creating of an out-of-court debt restructuring mechanism, aimed at addressing the high rate of non-performing loans in the Ukrainian banking sector. Our collaboration resulted in enactment of the Law on Financial Restructuring in June 2016 and support to its implementation. This support included establishing the institutions created by the Law, building their operational capacities and drafting arbitration rules and Restructuring Guidelines. By the end of September 2018, some 21 companies have initiated cases under the new Law and 11 cases (amounting to more than EUR 400 million) had been successfully concluded. The EBRD is co-financing the operations of the financial restructuring Secretariat until October 2022.
Hungary – Analysis of corporate restructuring and insolvency
The LTT has worked closely with the Hungarian Central Bank since 2014 on addressing the issue of high levels of non-performing loans in the country’s banking sector. In 2017 the Central Bank published, with the assistance of the LTT, a recommendation on corporate restructuring and consensual settlement. While technically non-binding, this recommendation has significant regulatory persuasion and is expected to unify and coordinate the approach that creditors take in out-of-court restructurings.
Serbia – Assessment of sale of NPLs
In 2018 the Legal Transition Team with KPMG and Moravčević Vojnović i Partneri in cooperation with Schoenherr prepared a report which identified the key impediments to sale of NPLs and proposed solutions for addressing the identified impediments. The report served the working group (consisting of representatives of Ministry of Finance, Serbian Central Bank and other Serbian authorities) to develop a clear strategy for NPL resolution (including proposing amendments to the existing legislation). An article published on Law in transition 2016 provides some insights on this project.
Croatia - Support for the Croatian insolvency framework
At the request of the Ministry of Justice of Croatia, the LTT completed an analysis in 2017 of the Croatian corporate insolvency framework, which will be used to inform the Ministry of Justice’s future reform actions and efforts to strengthen insolvency procedures. In parallel, we provided in-depth insolvency training to 170 members of the judiciary.