Lifting Moratoria on Enforcement and Bankruptcy of State-Owned Enterprises

For a considerable period of time, Ukraine has maintained a number of legislative restrictions on the enforcement of judgments and the application of bankruptcy procedures to state-owned enterprises (SOEs). Such moratoria were introduced at different times and for different reasons, ranging from the need to protect strategic assets to responses to economic crises, problems in individual sectors of the economy, and the consequences of war. At the same time, the prolonged application of these restrictions has created a distinct legal problem. A court judgment confirming a debt does not always ensure that a creditor can actually enforce it, while insolvency proceedings against certain categories of state-owned enterprises remain unavailable or significantly restricted.

In August 2026, a feasibility study on lifting moratoria on enforcement and the application of bankruptcy procedures to state-owned enterprises in Ukraine was published. The document was prepared by KPMG in Ukraine as the lead consultant under an EBRD technical cooperation project, with the participation of Sayenko Kharenko and international experts.

Why the System of Moratoria Needs to Be Reconsidered

According to the analysis, the authors of the study identified 18 existing moratoria related to enforcement against state-owned enterprises and 11 moratoria concerning bankruptcy proceedings. Some legislative acts simultaneously impose restrictions on both enforcement and insolvency procedures. The moratoria have performed, and continue to perform, a protective function. In particular, they make it possible to prevent the forced disposal of assets necessary for the operation of strategic enterprises, critical infrastructure facilities and entities providing essential public services.

However, the prolonged use of this mechanism also has adverse consequences. The study notes that restrictions on creditors' ability to protect their rights have reduced the incentives for some enterprises to settle their debts promptly and maintain proper financial discipline. This has contributed to the accumulation of liabilities that may remain unpaid for extended periods.

At the same time, the authors do not attribute the financial difficulties of state-owned enterprises solely to the moratoria. Other factors contributing to debt accumulation include chronic underfunding, ageing fixed assets, unreformed business models, loss of markets, tariff imbalances, and external economic and war-related factors.

There Is No Single Solution for All State-Owned Enterprises

The study does not propose the simultaneous lifting of all existing restrictions. Instead, it recommends a phased and differentiated approach. A decision concerning a particular enterprise should depend on its financial condition, strategic importance and alignment with the State Ownership Policy. Accordingly, a moratorium may be lifted, modified or retained for a certain period where necessary to facilitate restructuring or protect an important public interest.

At the initial stage, ownership entities are expected to distinguish between solvent and insolvent SOEs and conduct an asset inventory to identify enterprises holding strategic assets. This distinction has practical significance for selecting the appropriate legal mechanism. For a solvent enterprise, the main issue is restoring the normal regime for the performance of obligations. For an insolvent enterprise, the question is whether restructuring or insolvency proceedings should be applied. Where an enterprise holds strategic assets or performs critical functions, a special mechanism for protecting those assets or functions would need to operate in parallel. Under this model, state ownership in itself would gradually cease to constitute a sufficient basis for applying a general moratorium.

What Could Replace the Moratoria

An important element of the proposed concept is the replacement of broad statutory prohibitions with more targeted legal instruments. The study considers mechanisms including debt restructuring, targeted state aid, specific protection of certain state-owned assets, usufruct and special administration regimes. In particular, usufruct is considered as one possible means of separating the operation of an enterprise from ownership of strategic property. The document defines usufruct as a limited real right to use property belonging to another party and derive income from it, without the right to sell, donate or otherwise dispose of that property.

For strategic state-owned enterprises and critical infrastructure operators, the study separately considers the possibility of introducing a Special Administration Regime (SAR), drawing on the UK experience. Under the concept presented in the study, such a regime could be applied in specific strategic cases where ordinary market and corporate mechanisms are insufficient.

What Could Change for Creditors

For creditors, the proposed change in the overall approach to the performance of obligations by state-owned enterprises is particularly important.

Existing moratoria may result in situations where a creditor obtains a court judgment confirming its claim but remains restricted in its ability to pursue subsequent enforcement. The study notes that moratoria allow the performance of SOEs' financial obligations to be deferred, effectively shifting the corresponding financial burden onto creditors without the use of formal bankruptcy proceedings.

The proposed model is intended to gradually change this situation. Once strategic assets have been identified and special mechanisms for their protection established, the remaining property relations of state-owned enterprises should return to predictable procedures for the enforcement of obligations and insolvency.

This does not mean that all accumulated creditor claims would automatically be satisfied once a particular moratorium is lifted. A significant number of SOEs have legacy debts, while some enterprises may prove to be effectively insolvent. For this reason, at the third stage of the transition, the authors propose addressing legacy SOE debt through specialised restructuring instruments.

For creditors, this would primarily mean the emergence of a defined legal mechanism for dealing with outstanding debt instead of such debt remaining subject to a statutory restriction on enforcement for an extended period.