Decision of Supreme Court on collection of movable collateral property gives debtors time for talks with creditors
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- Created: Wednesday, 20 August 2014 11:51
The decision of the Supreme Court that all enforcement orders issued by notaries on collateral agreements before October 22, 2011 are illegal and are not to be enforced gives debtors time for negotiations with creditors, a partner of Maestro & Partners law group Ihor Omelchenko has said.
Commenting on the decision of the court chamber for civil cases of the Supreme Court of Ukraine of July 9, 2014, the lawyer said that the decision confirmed the conclusion that Ukrainian law did not foresee the collection of collateral property on the basis of the enforcement orders issued by notaries before October 22, 2011.
"All the enforcement orders issued by notaries on collateral agreements made before October 22, 2011 are illegal and are not to be enforced," he said.
Omelchenko said that the decision of the court for creditors does not mean that they will lose the collateral, as there is an efficient way of collecting the debt – the courts - but it requires more time for its realization.
The decision gives some time for debtors to hold negotiations with creditors and the possibility of finding a way to voluntarily pay the debt.
"Collateral remains and it will not be allowed to remove the collateral status from property, and thus, the property is first in line if a claim to collect the debt is filed," Omelchenko said.
The lawyer said that creditors used out-of-court methods of collecting the debt on the basis of notary's orders, despite the large risk of recognizing the order of notaries as non-enforceable.
Interfax Ukraine