Project Description
State-owned enterprises (SOEs) in Ukraine are exempt from any debt enforcement against them and bankruptcy rules. Creditors may not enforce their claims against SOEs due to laws and moratoria in place that prevent any action by creditors be it enforcement of judicial decisions against SOEs or initiation of bankruptcy proceedings. In 2019, amendments were introduced (145-IX) that suspended all pending enforcement proceedings and disallowed new bankruptcy proceedings for majority-owned SOEs until October 2022. Moreover, SOEs that are listed for privatisation (as well as those that have recently been privatised) are exempt from bankruptcy proceedings. Some SOEs are subject to “sectoral moratoria”, particularly those operating in energy, defence and transport sectors. The raising problem of non-enforcement of court decisions has compelled the Government of Ukraine to adopt the National Strategy from 30.09.2020 № 1218-р for Solving the issue of non-execution of court decisions against public authorities or state-owned enterprises, institutions or organisations as debtors for the period until 2022. The Strategy serves as a basis for an Action Plan, approved by the CMU Resolution of 17.03.2021. № 210-р, which envisages a wide range of activities aimed at reducing the number of moratoria and increasing the role of courts in the enforcement process.
The EBRD has been engaged since 2014 in a number of technical cooperation projects with an objective of bringing SOE governance in Ukraine in line with international standards and best practices, i.e. the OECD Guidelines for Corporate Governance of the SOE's (“OECD Guidelines”). As part of the ongoing comprehensive SOE reform package, the EBRD (Legal Transition and Governance and Political Affairs Teams) is presently providing support to the Ministry of Economy in development and adoption of the cornerstone legislation piece on corporate governance of SOEs (registered in the Parliament as “5593” and formerly known as “6428” ).
SOE insolvency and enforcement moratoria undermine the success of the overall SOE governance reform. Such regulatory exemptions fall in direct contradiction with the principles of level playing field and fair competition in the market place set out in the OECD Guideline III . Moratoria create unfair market advantage to SOEs with negative impacts extending across whole state sector of economy and overall business environment. Accordingly, the project aims to develop a detailed and well researched Concept for lifting the moratoria on enforcement against SOEs for the Government of Ukraine.
The objective of the TC project would be to assist the beneficiary – Ministry of Justice of Ukraine to do the following:
1) Review of moratoria, debt structure and formulating an approach for analysis:
· Review of the existing moratoria and mapping of their assumed effects on groups of SOEs and the economy;
· Analysis of SOE debt volumes, types and structures associated with specific types of moratoria;
· Setting the objectives and principles to guide the process of moratoria review and policy options for lifting (“The Principles and Objectives of the approach to lifting of the moratoria”); · Categorisation of active moratoria based on needed analysis for consideration of policy options and potential timelines for lifting;
· Overview of available policy alternatives to SOE enforcement and insolvency moratoria.
2) Formulation and review of the policy options at the level of individual moratoria or groups of “overlapping moratoria”:
· Formulating specific criteria for consideration of policy options at the level of each moratorium for each category of SOEs;
· Elaborating scenarios at the level of each moratorium or groups of overlapping moratoria for each category of SOE with a view to the aforementioned criteria;
· Modelling of economic effects of the policy options at the level of each moratorium or groups of overlapping moratoria;
· Shortlisting of the recommended policy options at the level of each moratorium or groups of overlapping moratoria for specific categories of SOEs.
3) Formulation and review of scenarios for collective moratoria lifting:
· Formulation of policy options/scenarios for combination and phasing of various moratoria lifting;
· Estimating economic impact of policy options/scenarios for collective moratoria lifting;
· Shortlisting of the recommended policy options for collective moratoria lifting;
· Elaboration of risk mitigating actions.
4) Concept formulation, implementation plan and recommendations for regulatory amendments:
· Formalisation of Concept for lifting the moratoria on enforcement against SOEs;
· Development of implementation plan;
· Development of recommendations for regulatory amendments in line with the Concept for lifting the moratoria on enforcement against SOEs.
Understanding Transition
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Business opportunities
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