On 22 September 2011, the Parliament of Ukraine adopted the Law of Ukraine No. 3795-VI “On Amendments to Several Legislative Acts of Ukraine regarding the Regulation of Legal Relations between Creditors and Receivers of Financial Services” (the “Law”). The Law, among other changes, introduced amendments to the Law of Ukraine “On Restoring Debtor’s Solvency or Recognising it Bankrupt”, No. 2343-XII, dated 14 May 1992, as amended (the “Bankruptcy Law”).

On 22 September 2011, the Parliament of Ukraine adopted Law of Ukraine No. 3795-VI “On Amendments to Several Legislative Acts of Ukraine regarding Regulation of Legal Relations between Creditors and Receivers of Financial Services” (the “Law”). The Law became effective on 16 October 2011. Although the positive impact of certain amendments is rather ambiguous at this stage, the Law is likely to reduce risks in the financial system.

The major amendments envisaged by the Law cover the following key areas:

Loans and security

Every business must manage risk. Whenever such risk turns into reality, the consequences must be accepted and declared for the well being of the wider economic environment. The purpose of this article is to analyse the legal framework of the commencement of insolvency proceedings at a debtor’s request and the sanctions applicable when such a framework is surpassed.

The collection of the insolvency estate is one of the important phases of insolvency proceedings. The Bulgarian Commerce Act (Issue No. 48 dated 18 June 1991, as amended) (the “Act”) provides certain tools to facilitate the collection of funds and other assets in order to “maximise” the insolvency estate. One such tool is the ability of the insolvency administrator, or the creditors to the insolvency estate, to challenge the validity of acts and transactions performed by the insolvent company after the insolvency trigger date.

Following last edition’s article on the insolvency proceedings of the market-leading Czech betting company, we would like to provide an update on the progress of the company’s insolvency proceedings.

On August 26, 2011 the Italian Supreme Court issued the decision no. 32899 stating that shareholders of a company will commit an offence if they unreasonably provide funds to a company in distress, rather than proceeding with the immediate liquidation of the company.

From 4 August 2011 special insolvency rules now apply to those Hungarian companies which the Government classifies as “highly important” from a national economic perspective. Insolvency proceedings can be started as a special procedure.

Classification

The ongoing financial crisis has given rise to an increase in financial restructurings for many German companies, as a way of avoiding possible insolvencies. German companies have taken various approaches towards the painful process of restructuring. For instance, they have streamlined their operations, cut costs and raised capital.

The new bankruptcy provisions contained in the Civil Law (Miscellaneous Provisions) Act 2011 were commenced yesterday. The Act has been in force since 2 August.

The new provisions allow for automatic discharge on the 12th anniversary of a bankruptcy adjudication order and a reduction in the period for application for discharge from bankruptcy to five years from 12 years.

We are pleased to present this Summer 2011 edition of the CMS Restructuring and Insolvency in Europe Newsletter.