The full-scale invasion of the Russian Federation touched all spheres of life and business. In particular, the conjuncture of the problem debt recovery market has changed, and even the situation with recovery under enforcement orders.
During the period of martial law, amendments to the Law of Ukraine “On Executive Proceedings” introduced a moratorium on the execution of executive inscriptions by notaries. (Law No. 2455-IX dated 07/27/2022, which entered into force on 08/25/2022)
Also, during the period of martial law, the above-mentioned Law stopped the collection of wages, pensions, stipends and other income of the debtor (except for decisions on the collection of alimony and decisions for which the debtors are citizens of the Russian Federation) and permission was granted to carry out expenditure transactions from the seized accounts of debtors , if the amount of recovery under the executive document does not exceed UAH 100,000.
The aforementioned changes to the Law did stop the opening of new enforcement proceedings, however, debtors in active enforcement proceedings remained “hostages” of the debtors’ register, since the Law does not provide for the obligation of public and private executors to end such proceedings.
Therefore, the enforcement proceedings remained open, but the mechanisms for carrying out these proceedings during the martial law period stopped their operation.
In addition to the really socially sensitive issue of enforcement inscriptions on unsecured loans of individuals, the above-mentioned changes to the legislation also completely blocked the execution of inscriptions executed on notarized pledge agreements for vehicles, agricultural machinery, production equipment and other movable property.
Consequently, creditors have lost the possibility of a quick and effective mechanism to protect their rights in case of debt. Thus, before the introduction of the moratorium, in the event of an undisputed debt, creditors had the right to apply to a notary for execution of an executive inscription on a pledge agreement and present it to the Internal Revenue Service or a private executor for execution. After the opening of executive proceedings, the executor had the authority to search, seize, and sell property.
Now the creditor needs to go to court, which involves additional expenditure of resources, and most importantly, time, which unscrupulous debtors often use to hide, convert, dismantle the mortgaged property and avoid paying the debt. In addition, hundreds of thousands of writs of execution are currently being executed (according to opendatabot.ua), which, in the event of an appeal to the court, can significantly burden the judicial system.
An alternative to writs of execution could be the creation of a separate judicial institution or judicial chambers that would consider, in particular, debt collection cases, but this is a complex and lengthy process that is currently being actively discussed by the professional community.
