New opportunities for debt collection securing. Amendments to Ukrainian legislation

Unfortunately obtainment of court decision about collection of debtor’s debt cannot guaranty collection of the debt in Ukraine. Usually the debtor will not fulfill the court decision on his own free will and when it comes to enforcement proceedings it turns out that there are no funds on debtor’s accounts and property which could be seized is not registered as his possession. Such situation is quite typical and usually results in closure of enforcement proceedings based on impossibility of its enforcement.

However absence of any property registered as debtor’s possession does not mean the actual absence of property.

On the 9th of March 2011 a new version of Law of Ukraine “On enforcement proceedings” (hereinafter – the Law) entered into force and provided new ways and opportunities on how to secure coercive enforcement of court decisions and other bodies.

Thus, Subsection 18 of Article 11 of the Law provided the state enforcer with a right to apply to court in order for the latter to set temporary limitation of right for individuals and heads of legal entities that have debt to leave the territory of Ukraine until they fulfill their obligations set by court decision if the debtors avoid fulfillment of such decisions. Respective amendments have been made to the Code of Civil Procedure of Ukraine (Article 377-1 of the Code of Civil Procedure of Ukraine).

It should be pointed out that application of mechanism of limitation of debtor’s right to go abroad is a right of state enforces and not an obligation.

Application of such measure to a debtor can be initiated by the state enforcer or by creditor’s petition. However practice of interaction with the state enforcement services has shown that state enforcers are usually very busy and do not always have time to act actively to apply all possible means of influence regarding the debtor.

Application of such measure regarding a debtor who has a necessity to go abroad (business travels, family ties) will without any doubt speed up the process of court decision fulfillment.

Implementation of such mechanism into the Law of Ukraine “On enforcement proceedings” is not the only positive amendment which allows experts in the field of law to protect Clients’ interests more effectively since practice of interaction with enforcers but shows that qualified legal support used by the creditor can significantly increase the amount of enforced court decisions.

This material was prepared by Pravova Dopomoga's Kiev law office legal experts within practice of Problem loans.

Publication date: 22/09/2011

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