• Andrii TREMBICH|Gramatskiy & Partners

    The permanent financial crisis, the under-reformed judiciary and the viewpoint of many Ukrainian businessmen that “debts are only paid by cowards” have become already memes that form a legal and cultural background of the bankruptcy institution in Ukraine. Every month commercial courts open about 30 new bankruptcy proceedings of legal entities in Ukraine; every year about 1,500 companies are recognized as bankrupt, but just less than 10% of creditors’ claims are satisfied as a result. No wonder, according to the Doing Business 2019 in the section “Resolving Insolvency” Ukraine is only in 145th place.

    The concept of business freedom in the field of debts and bankruptcy is traditionally limited to protection of creditors’ rights and provision of effective debt collection. In Ukraine, the main problem of this freedom is that it frequently becomes “freedom from debts”. Declaration of insolvency has become a comfortable refuge for temporary rest, especially in the cases when time resolves almost everything. By merely opening a bankruptcy proceeding a debtor creates a temporary lawful immunity that is very precious today. Such protection of the debtor should be balanced by fast repayment of debts in the property disposal and liquidation procedures. For these reasons, a completely new Bankruptcy Procedure Code has been adopted and came into effect on 21 April 2019.

    Nevertheless, formation of the legal background is only the initial and simplest stage for any reform. Institutional and practical levels are much more important because just right there a legal certainty that is so necessary and precious for investors is formed. The rebooting of the judicial system that has just been launched at the top level is far from the finish line. At the same time, the effectiveness of bankruptcy proceedings depends in the majority of cases on the foundation of this system (courts of first instance) where extremely few judges are able to think in global categories, to resolve cases that do not follow a pattern, to see real business situations behind “liquidation assets” and “creditor registers” and to regulate relationships in a creative way.

    The average duration of insolvency court proceeding in Ukraine is 3 years (my personal record is 17 years and it was terrible), the expenses are about 40% of the liquidation assets. These points are key indicators of effectiveness for foreign investors, creditors and, as was mentioned, for the Doing Business rankings. Any separate changes cannot improve greatly these indexes. Therefore, taking into account the general state of the judicial system, we have to be much less optimistic on this matter in 2019-2020.

In 2019 Alekseev, Boyarchukov and Partners bolstered its bankruptcy and insolvency practice, the firm’s key mainstay. It provides a full circle offering, representing a big range of debtors from agribusiness, infrastructure, real estate, construction, hospitality and trade sectors, as well as extensive pull of banking clients seeking representation of their creditors’ claims. In 2018 the firm saw a rapid increase in its activity on the market, acting a lot for established clientele, namely banks. These included Ukrsotsbank, Alfa-Bank, Ukrgasbank, Raiffeisen Bank Aval. Recent highlights included representation of Ukrgasbank in bankruptcies of Mriya Podillya, Ecobud Building Group, LLC Tira Trade. The firm’s managing partner, Sergey Boyarchukov, is the key figure and recognized by peers for his involvement in the development of the profession. A group of lawyers (that previously joined with the merger with Trusted Advisors in November 2017) including partners Vladyslav Reznikov and Artem Podolskiy, left the firm.

One of the largest independent dispute resolution teams on the market is EQUITY law firm. It demonstrates continuing growth of litigation involving distressed assets and large-scale insolvency mandates. Given its major industrial clientele the team acts consistently in comprehensive bankruptcy cases involving a group of companies and numerous judicial proceedings. The firm accompanies the largest long-lasting bankruptcy in the market with the total amount of creditors’ claims of around USD 1.3 billion, acting for the Azovmash group of companies on all proceedings and restructurings of the 10 largest creditors. The team also represents a number of sound debtors, particularly large Ukrainian car service provider AIS Corporation, Kherson Plant of Cardan Shafts, Ferrexpo Petroleum Holdings, PJSC Rosava, Kyiv Shipbuilding and Ship Repair Plant, Wholesale Network 2011 (Optova Merezha) and others. At present the firm acts for Ukrinkom (previously — Ukrinbank) in disputes related to its liquidation; represents the interests of the former owner of Finance and Credit Bank in a liquidation case; acts for Helen Marlen Group on its debt restructuring with Delta Bank, National Bank of Ukraine and the Guarantee Fund of Investments of Physical Persons. This past year the team expanded its caseload of creditors’ representations. The firm’s front man and active litigator, Oleg Malinevskiy, works on the most sophisticated cases, acting as a lead partner in complex litigation mandates. Managing partner Victor Barsuk is the firm’s core strategist. Partner Serhiy Chuyev, co-head of the bankruptcy practice, is active in litigation proceedings with banks.

Ario Law Firm has an outstanding team focused on bankruptcy matters, handling liquidation procedures and resolving arising criminal aspects. The firm is highly experienced in representing corporate debtors from a variety of sectors, as well as representing interests of banks in their creditor’s claims. The team often acts as a negotiator between parties, creditors and debtors. The firm continued supporting Lysychansk Glass Factory Proletary in the course of its bankruptcy and subsequent liquidation procedure, as well as introduction of debt restructuring before state-owned Ukreximbank and Naftogaz of Ukraine. Other disclosable current cases of the firm are representation of Koron-Agro in its bankruptcy procedure; acting for a purchaser on the acquisition of assets of Bila Tserkva Dairy Plant, which was previously supported in insolvency proceedings. The public case of Mykolayiv Shipyard Ocean, where partner Iryna Serbin acted as an insolvency official, was successfully closed past year. The case was sophisticated with criminal proceedings, and in December 2018 the property complex was sold for UAH 122 million. The monolithic practice team has three partners on board. Julian Khorunzhii is one of the most active practitioners in the market, and acted as one of the authors of the new Bankruptcy Procedure Code. Iryna Serbin constantly receives strong feedback from peers. Oleksii Voronko, managing partner, is deeply involved in practice and communication with clients.

Ilyashev & Partners is a litigation power­house with offices in Ukraine, Estonia and Russia. The firm handles bankruptcy cases equally well-versed for representing both creditors and debtors. The practice team is known for representations in cases involving agribusiness, real estate, construction, industrial, mining and transportation companies. In Ukraine the firm supports the bankruptcies of Creative Group, Sumykhimprom, FSC More, etc. The firm regularly represents the interests of banks, currently acting for Alfa-Bank Ukraine in its claims to insolvent businessman Kirill Podolsky, founder of the Anywayanyday service. The core members of the team Andriy Konoplya and Vadym Kizlenko are strongly recognized on the Ukrainian market. Roman Marchenko exercises supervision and is praised for unrivalled expertise. The Moscow office reveals an increasing number of bankruptcy instructions, being involved in large complex cases evolving many episodes of litigations. The practice team in Russia headed by Dmitry Konstantinov is focused on bankruptcies of developers and infrastructure companies.

L.I. Group is known for representation of creditors, mostly banking institutions in insolvency related litigation and within all stages of bankruptcy proceedings of debtors.. The firm added a number of banks to its client list, which includes names like OTP Bank, Alfa-Bank, VTB Bank, Sberbank, Ukrsotsbank, UkrSibbank BNP Paribas Ukraine, VS Bank, Piraeus Bank, TAS GROUP, TascomBank, Universal Bank. The team is noted for its debt recovery track record securing the credit claims of clients. Two partners on board, Artur Megeria and Mykola Kovalchuk, are directly involved in practice.

Absolute Law Agency, a domestic law firm with offices in Dnipro and Kyiv, has a sizeable team and solid track record of bankruptcy matters in its caseload. The agency is retained by a variety of banks, for example, VTB Bank and First Ukrainian International Bank (FUIB), for representation at all stages of corporate bankruptcies. VTB Bank is represented in a range of bankruptcies, namely of Industrial Power Systems, Westa Industrial, Dnipro Plant Mineral Fertilizers, Joint Venture Iboya. FUIB is represented in the bankruptcies of TMM-­Energobud, Ukrgazservice, Amstor, Sintal Agro Trade, Ukrainian German joint venture Alcor, Private Scientific Production Enterprise Polimer-Akaciya, and others. The current caseload takes in representation of creditors of PJSC Odesa Butter and Fat Plant which is subject to a liquidation procedure; support of bankruptcies of a number of industrial enterprises — Locomotive Rebuilder Plan, SBK-Progress, Radmir-Center, etc. Oleksandr Bondarchuk and Oleksandr Hladii are the core practi­tioners.

ADER HABER is one of the most dynamic local law firms and has a flourishing dispute resolution practice. With the well-versed team of debt recovery litigation and enforcement proceedings, this past year the firm reloaded its restructuring and bankruptcy practice with an inflow of client assignments and strategic hires. The arrival of Oleksandr Udovychenko, the new head of the bankruptcy and financial restructuring practice as a counsel (retired judge of the Supreme Economic Court of Ukraine) enhanced expertise and attracted a subsequent workflow into the firm. The highlights from the research period include representation of a large agrarian distributor in Southern Ukraine in bankruptcy proceedings and other property disputes with claims to debtors; acting for a large manufacturing company in Eastern Ukraine in bankruptcy proceedings. The firm has strong following of banking clients, and provided comprehensive analysis of the insolvency of a Ukrainian bank (forensic audit).

Renowned full-service law firm Arzinger is a highly-active team in bankruptcy matters, having both strong litigation capacities and a strong track record of debt restructuring mandates. The firm has particular experience in advising creditors — major international banks, in a series of big bankruptcies of Ukrainian corporates. The team represents a leading Austrian corporate and investment bank as a creditor in insolvency proceedings of Alchevsk Iron & Steel Works, and a Swiss-based leading bank conglomerate as a creditor within a number of insolvency cases involving former Ukrainian agricultural group Mriya. The practice is led by Anton Molchanov, senior associate, known for stand out work for creditors. Markian Malskyy1 is a lead partner.

Gramatskiy & Partners is noted for a strong flow of local clients, providing support on judicial and extrajudicial bankruptcy proceedings. The firm often supports liquidation procedures, sanation and amicable agreements. Recent highlights include supporting the bankruptcies of PJSC Dialir, Plant Keramic, and its long-standing representation of Plant Quant on restoring commercial activities, solvency, exits from bankruptcy procedures and post-procedure disputes. The firm also acts for Ditrade LLC on legal issues of debtor management in various stages and procedures of bankruptcy; identification and refutation of the interests of persons with respect to the debtor Toxilla LLC. Andrii Trembich leads the practice.

Khomenko, Pita & Partners is a renowned bankruptcy boutique with a special focus on supporting the bankruptcies of state enterprises. The team handles full-circle bankruptcy work, often working on the debtor side, and performs lots of insolvency-related litigations. The clientele takes in names from the military and defense, agribusiness, real estate, construction, hospitality, healthcare areas. Oleksandr Khomenko is known as an exceptionally strong niche expert. Ivan Zakharko received positive feedback from the market.

LCF Law Group is one of the leading domestic litigation law firms with recognized strength in debt recovery and bankruptcy. The team is often preferred by major commercial banks for handling large-scale complex cases requiring substantial litigation capacities to react to actions brought by unfair debtors on asset extraction, recognition of security as invalid and procedural abuses. This past year the firm represented the interests of Alfa-Bank, Ukrsotsbank, Prominvestbank in the course of bankruptcies of its debtors. The team also represents a number of sound corporate debtors. For example, it supports the bankruptcy procedure of eleven enterprises, member of Mriya Agro Holding group, with total value of creditors’ claims of around USD 800 million. Olena Volyanska, practice head, has recently been promoted to partner. Alexander Biryukov, counsel, is deeply focused on insolvency procedures and cross-border matters. Artem Stoyanov, senior partner, is also involved in significant mandates.

Sokolovskyi & Partners has a standing reputation of preferable legal counsel for liability crisis management and bankruptcy in the mid-market. Given its strong tax and criminal law expertise, the firm advises on the tax aspects of insolvency and eliminating crime at all stages of the procedure. The firm has local clients in the main, and represents both debtors within the full-circle of bankruptcy proceedings (including liquidation) and creditors, frequently working on recognition of creditor’s claims and representation of their interests in bankruptcy proceedings. Renowned partner Vladyslav Filatov, who headed the firm’s bankruptcy practice for many years, left the firm for the Ministry of Justice of Ukraine. Ivan Balytskyi, counsel, took over the leadership.

Baker McKenzie is traditionally at the forefront of debt restructuring work and consistently represents prestigious international banks and financial companies on insolvency matters in Ukraine. The team works primarily on the creditors’ side, representing their interests in bankruptcy cases involving Ukrainian corporate borrowers. Ihor Siusel, partner of dispute resolution, leads the practice.

Bankruptcy boutique Nobili is noted for representing borrowers. This past year the firm handled representation of a company involved in real estate lease in the procedure of liquidation. Industrial companies are among its clients. For example, Bazys-Avto LLC, Uzhhorodskyi Turbohaz PJSC, Melytopolske Spetsyalyzovane Upravlynnia No. 100 Stalkonstruktsyia LLC. Natalia Tyshchenko, managing partner, is the main contact. Olena Fomina, who received praise from peers, has left the firm.

Vasil Kisil & Partners has a stable row of international clients, mostly creditors, enlisting the firm for representation in insolvency proceedings and liquidation, as well as debt recovery litigation. The team represented a subsidiary of Piraeus Bank in Ukraine in bankruptcy proceedings of a distressed construction company in relation to the validity of a surety agreement concluded by the debtor. Another highlight is representing a major Latvian bank in the liquidation procedure of a Ukrainian bank. Oleg Kachmar, partner, and Yuriy Kolos, counsel, are the key figures.

Krolevetskyi & Partners, a Kharkiv-based law firm, develops its practice of comprehensive support in bankruptcy. The firm is a point of choice for industrial enterprises in the eastern region of the country, that are assisted in meeting creditors’ claims, disposal of assets, sanation and liquidation procedures. Kyrylo Krolevetskyi is the main contact.

Jurvneshservice law firm has notable experience in the aviation sector. In addition, one big case in 2018 concerned the bankruptcy of joint stock company Demos, a metallurgical waste re-processing plant. The bankruptcy practice is headed by Dmytro Salatiuk.

1 On 5 July 2019 he was appointed head of Lviv Regional State Administration.