Coronavirus (COVID-19) related moratorium on corporate and retail loans in Ukraine

1. Description of the legislation

1.1 Is there a moratorium on loans legislation implemented in your jurisdiction?

Ukraine has introduced only a partial moratorium releasing debtors from liability for the delayed performance of obligations under consumer loans 1 Law of Ukraine “On Amending the Tax Code of Ukraine and Other Laws to Support Taxpayers for the Period of Measures to Prevent Occurrence and Spread of Coronavirus Disease (COVID-19)” of 17 March 2020   (please see more details below).  

At the same time, the Ukrainian Parliament has adopted several laws aiming, inter alia, to support businesses and individual borrowers 2 Law of Ukraine “On the Amendment of Certain Legislative Acts of Ukraine Aimed at Ensuring Additional Social and Economic Warranties in Relation with Spread of the Coronavirus Disease (COVID-2019)” of 30 March 2020   by introducing a prohibition on lenders to increase interest rates under loan agreements for the duration of the quarantine introduced by the Government.

In addition, the National Bank of Ukraine (NBU) recommended that the commercial banks introduce “loan holidays” for both commercial and consumer loans for the duration of the quarantine period and then restructure them if needed after the quarantine is over. To stimulate implementation of this recommendation, the NBU allowed banks not to form reserves for defaulting debts of borrowers 3 The National Bank of Ukraine Resolution No. 39 of 26 March 2020   (unless such borrowers were assigned the lowest credit ratings prior to 1 March 2020), provided that such loans are restructured before the end of September 2020 and the following conditions are met:

  • loan requires restructuring due to borrower’s financial difficulties caused by pandemic-related restrictive measures
  • the bank has acknowledged the necessity of short-term debt restructuring by not later than 1 August 2020
  • restructuring will not result in devaluation of expected loan proceeds by more than 10% as compared to the amounts provided by respective loan agreement.

In addition, the NBU provided the following recommendations to the banks with regard to loan restructuring:

  • restructuring process can be initiated by banks or by borrowers
  • banks are advised to inform the borrowers about the possibility of loan restructuring in any convenient way
  • restructuring of loans granted to medium- and large-sized businesses should be considered on a case-by-case basis, taking into account the latest financial statements, current financial situation, vulnerability of sectors and enterprises to the current economic crisis and prospects for their recovery.

1.2 If no: Are there any ongoing discussions regarding a potential introduction of such measures?

1.3 What is the name of the relevant legislation (the “Relevant Act”)?

1.4 What is the duration of the measures (period of moratorium)?

1.5 Does the legislation provide for an extension of the period of moratorium?

1.6 Is the moratorium mandatory, or can each borrower opt out should they wish to simply continue payments, or opt in if they want to be protected by the moratorium?

2. Parties and agreements affected by the Relevant Act

2.1 Is the moratorium available for both corporate and consumer loans?

No, moratorium covers consumer loans only.

2.2 Who are the affected Lenders?

All lenders granting consumer loans in the territory of Ukraine.

2.3 Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?

The moratorium extends to all lenders granting consumer loans in the territory of Ukraine.

To the extent foreign law can apply to loan agreements with Ukrainian consumers, unless the loan agreement has been entered into in the territory of Ukraine, the moratorium is unlikely to cover also foreign law-governed loan agreements. From a practical perspective, however, in the absence of an official interpretation of the National Bank of Ukraine, it is recommended to check with the local Ukrainian bank servicing payments under the loan agreement whether  it will process payments of penalties imposed by non-resident lenders despite the moratorium.

3. Impact on the loan agreements

3.1 Is there a cut-off date with respect to loan agreements to which the Relevant Act will apply (e.g. not applicable to loan agreements entered into after the cut-off date)?

The moratorium applies only to liability that could have been triggered by defaults happening between 1 March 2020 and 30 April 2020.

3.2 Does the moratorium apply to principal only, or also to interest and/or fees?

Moratorium applies to liability (including penalties) that could have been triggered by defaults under the consumer loan agreements happening between 1 March 2020 and 30 April 2020.

3.3 Will the maturity of the loan automatically be extended by the moratorium period?


3.4 Are repayments and interest which have become due and payable under the contract before the Relevant Act has come into force covered by the moratorium?


3.5 Will lenders be able to terminate a loan due to an event of default other than non-payment (e.g. breach of financial covenants)?

The moratorium per se does not prohibit termination of a loan agreement. At the same time, the moratorium releases the debtor from all liability triggered by defaults happening between 1 March 2020 and 30 April 2020, meaning that termination of a loan agreement on the basis of such defaults will most likely be impossible. At the same time, the wording of loan agreements needs to be analysed on a case-by-case basis.

Picture of Anna Pogrebna
Anna Pogrebna
Kyiv (CMS RRH)
Olekhov, Ihor
Ihor Olekhov