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20.12.2016

Parliament sets up legal moratorium for repayment of SE “Donetsk Railway” indebtedness by UZ

On December 20, Ukrainian Parliament adopted the law “On Amendments to Certain Ukrainian Legal Acts concerning Railway Enterprises with Property Located on the Anti-Terrorist Operation Territory”. This law temporarily sets up the moratorium on foreclosure upon the assets of JSC “Ukrzaliznytsia” (the Company) due to obligations of railway enterprises, whose property is located on the Anti-Terrorist Operation (ATO) territory. In particular, this law protects the Company from enforcement under obligations of SE “Donetsk Railway” (the Donetsk Railway).

This law also provides, that at the time of moratorium, enforcement proceedings and measures regarding foreclosure upon the Company's assets due to obligations of railway enterprises, whose property is located on the anti-terroristic operation territory, shall be ceased.

The law applies to obligations of enterprises, whose rights and obligations were not transferred to the Company. The Company did not become an assignee of the rights and obligations of these railway enterprises in accordance with procedures provided for by the Resolution No. 200 dated 25.06.2014 and Resolution No. 604 dated 12.11.2014 taken by the Cabinet of Ministers of Ukraine.

At the time of establishing the Company the property of railway enterprises, located on the ATO territory (in particular, Donetsk Railway's property), was not included into the lists, consolidated inventory acts, consolidated transfer act and the authorized capital of the Company or appraised in due course according to the Resolution of the Cabinet of Ministers of Ukraine No. 604.

Meanwhile, Donetsk Railway's creditors consider the Company as its assignee and require repayment under obligations of Donetsk Railway. In should be noticed, that Donetsk Railway continued its activity as a legal entity, was not excluded from the Unified State Register of Legal Entities and Individual Entrepreneurs, and the Company does not have full control over its assets.

Thus, the adopted law restores balance between assets and obligations of reorganized railway enterprises accepted by the Company and protects economic interests of the Company against legal collisions and financial obligations of Donetsk Railway.