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“Loan repayment holidays” for enterprises affected by military actions and occupation of the Russian Federation: Ukrainian Parliament adopts new Law

01 April, 2025 Newsletters

On March 27, 2025, the Verkhovna Rada of Ukraine passed Law No. 12148, introducing “Loan Repayment Holidays” for businesses affected by military actions and occupation. This law provides relief to borrowers under credit agreements and lessees under financial leasing contracts during martial law and for one year after its termination. Key provisions include suspension of debt payments, halting penalties and sanctions, and prohibiting foreclosure on collateral property.

The Scope of the Moratorium

The moratorium applies only to cases where collateral property or leased assets are located in areas affected by military actions or occupation. It covers agreements signed before the law’s enactment. Borrowers or lessees can apply for the moratorium if specific conditions are met, including income thresholds and the status of collateral property.

Key Features of Loan Repayment Holidays

For Credit Agreements:
- Suspension of payment obligations (principal, interest, fees).
- Halt on foreclosure actions against collateral property.
- Freeze on accruing monetary obligations.
For Financial Leasing Contracts:
- Suspension of leasing payments.
- Freeze on enforcement actions related to leasing obligations.
- Adjustment of payment schedules post-moratorium.
General Provisions:
- Extension of contract terms for the duration of the moratorium.
- Suspension of statute limitations and enforcement deadlines.

Eligibility Criteria

Businesses must meet specific conditions to qualify for loan repayment holidays, such as:

Annual income thresholds.
Collateral property located in conflict zones or occupied areas.
Restrictions on dividend payouts during the moratorium period.

Application Process

Borrowers or lessees must submit a formal application with supporting documents to their creditor or lessor. Creditors have 20 working days to approve or reject the application, with decisions subject to judicial appeal.

Comparison with Existing Moratorium

The new law supplements an existing general moratorium under the Civil Code of Ukraine. While the current moratorium is automatic and applies broadly, the new law introduces targeted relief for businesses with stricter eligibility criteria and broader protections, including suspension of principal payments and foreclosure actions.

Conclusion

The law establishes tailored “loan repayment holidays” for businesses affected by military actions or occupation, providing financial relief during challenging times. It complements existing provisions while offering enhanced protections for eligible enterprises.

The full version of the article is available in Ukrainian by the link.

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