Poroshenko signs law releasing Ukraine's defense industry companies from Russian debts

Ukrainian President Petro Poroshenko has signed the law “On introducing changes to Ukraine’s laws concerning the resolution of several issues of the indebtedness of defense industry complex companies – members of the state concern Ukroboronprom – to the aggressor-state and/or occupant state and ensuring their stable development”, announced Poroshenko’s press service.

The law proposes mechanisms to protect the economic activity of companies in the defense industry complex, which are state property and have strategic significance, from the negative consequences of the actions of legal entities registered in the territory of the aggressor/occupant state, or legal entities with foreign investments from that state.

A ban is placed on the enforced implementation of rulings, including the recognition and implementation of the rulings of foreign courts, to collect debt in cases where the creditor is a legal entity of the aggressor/occupant state or a legal entity with foreign investments or a foreign enterprise of the aggressor state, and the debtor is a defense industry company on the list of facilities with strategic significance. While the circumstances of indebtedness to legal entities of the aggressor-state remain in effect, open court proceedings are suspended and new proceedings are prohibited, as well as the enforced implementation of decisions to collect debt from such a company in favor of a legal entity with said ties to the aggressor state.

Bankruptcy proceedings for defense industry companies are also not permitted when initiated by legal entities related to the aggressor-state.

The restrictions also affect obligations in which a party has been substituted (creditor, claimant) or there has been an assignment of the right of claim, resulting in the right passing to a third party, when the debt was initially incurred towards a legal entity of the aggressor state.

On July 12, the Verkhovna Rada passed the second reading of a law releasing the Ukrainian defense  concern Ukroboronprom from the obligations of the annulled military technology collaboration agreements with Russia. The bill was supported by 244 MPs. It is estimated that, according to the terminated agreements with Russia, Ukroboronprom companies would have to pay out 3.8 billion hryvnia.

  Ukraine, Ukroboronprom, Petro Poroshenko, Russia