Prospects of Preventive Restructuring

Preventive restructuring is a relatively new institution in Ukraine, which has already proven itself to be a necessary element of a modern insolvency system. The reasons for its introduction were clear: commitments to European partners, the need to support businesses during an unprecedented crisis, and the desire to offer a second chance to responsible entrepreneurs. Legislative changes have effectively filled a long-standing gap: companies now have a real alternative between simply closing down/declaring bankruptcy and continuing operations under the burden of debt. This alternative is the resolution of problems in cooperation with creditors, in a controlled manner and under court supervision.

The first months of this new mechanism show that it still needs to be fully adopted. The business community is only beginning to understand the procedure, and many are waiting for the first successful cases. This is typical for any innovation: time is needed to build both practice and trust. Nevertheless, experts already see significant potential in preventive restructuring. There is every reason to believe that in a few years, it may become as familiar a procedure as personal bankruptcy is today.

For business owners facing financial difficulties, preventive restructuring opens important opportunities. It is a chance to save their business, avoid the stigma of bankruptcy, and fulfill obligations to partners under new, more manageable conditions. This is especially relevant for small and medium-sized enterprises (SMEs), which are more vulnerable to temporary hardships. The new law is specifically designed to simplify the procedure for SMEs — lowering entry barriers, providing standard solutions, and offering consultative support. This focus aligns with the European “Second Chance” ideology for entrepreneurs: one mistake should not mean the end of a career or business.

Of course, challenges remain. Courts need to develop consistent approaches, particularly regarding the evaluation of a plan's "reasonable prospect," the protection of dissenting creditors’ rights, and the appointment of restructuring administrators. It is also possible that certain provisions will need refinement once their weaknesses become apparent in practice. For instance, experts have already noted that the Code does not explicitly regulate whether company management is released from liability if they attempt preventive restructuring but the court ultimately rejects the plan and bankruptcy becomes inevitable. Such issues will likely require clarification by the Supreme Court or targeted legislative amendments.

Similarly, time will tell whether the current six-month timeframe is sufficient for complex, multi-party cases — it may be worth providing a mechanism for extensions in exceptional situations (the EU directive allows for the overall period to be extended up to 12 months if necessary). However, these potential difficulties are natural for any new institution and do not diminish its overall benefits.

In summary, preventive restructuring is a timely and progressive reform driven by both the demands of European integration and the internal need to support the economy during challenging times. The road ahead involves building real-world application for this new instrument. But the first steps have already been taken, and there is every reason to believe that Ukrainian businesses will gradually adopt this tool.