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Legal proceeding (“Legal debt colection” stage)

Saturday, 29 November 2014 10:36
Legal proceeding (“Legal debt colection” stage)

Legal proceeding (“Legal debt colectionstage) consists of taking a set of measures oriented to enforceable debt collection of the Customer under the Contract by repossessing all assets of the Customer (Guarantors, Debtors) and/or collateralized property.

This stage is valid from 91st  (ninety first) day of the Customer’s past-due under the Contract.

Legal debt colection can be started earlier independently of the period of the Customer’s past-due under the Contract on past-due accounts if there are enough virtues to classify a debt collection as a bad loan according to the criteria mentioned of this Procedure and only if there is a resolution of appropriate collective body of the Bank (Credit Committee, Bad Loan Committee) on meeting requirements of the Bank according to precisely determined way  (appeal to the court, pre-trial order of collection).

The outstanding of the Customer is not transferred to “LEGAL” stage after 90 (ninety) days of the past due, only if approved by Bad Loan Committee, provided by Distressed Assets Recovery Unit, on the previous stages of decision on regulation of debt repayment issue on pre-trial stage (approval of debt repayment schedule) and its precise observance by the Customer.

Units of the Bank involved in activity on Legal debt colection” stage

Distressed Assets Recovery Unit, cooperating with Legal Unit of the Bank, Security Unit of the Bank, the Branch management, is authorized to take all necessary measures on this stage. Thus, functions of fulfillment of instant measures for debt repayment and also organization of cooperation of all units of the Bank on precisely determined stages are delegated to Distressed Assets Recovery Unit.

Cooperation order of the Bank units

After a decision to be made by the Board Member/ BLC on initiation of procedure on enforceable debt repayment/ protection of interests of the Bank in cases mentioned in part 6 of this Procedure, by submitting a claim to the court, Distressed Assets Recovery Unit informs of the mentioned decision a head of Legal Unit of the Bank by sending an office memo concerning the issue by e-mail of the Bank.

Having received a message from Distressed Assets Recovery Unit, Head of Legal Unit of the Bank organizes and secures submitting an appropriate claim to the court within 15 (fifteen) days after receiving the message.

Legal Unit represents interests of the Bank in courts, concerning debt collection of the Customer under the Contract, before the court decision will come into force (taking into consideration probable appeal of the court decision in appeal and cassation order), and before issuing an executive document.

Legal Unit of the Bank informs of taken measures, their consequences Distressed Assets Recovery Unit by e-mail of the Bank or by other way allowing to fix the date of sending information.

Having received the executive document (a writ of execution) stipulated by the current legislation of Ukraine, an original one is transferred to Distressed Assets Recovery Unit in order to organize and maintain its fulfillment.

Transfer of the executive document (a writ of execution) is formalized by a delivery-acceptance act.

If decision is made on enforceable debt repayment by way of repossessing collateralized property in virtue of writs of execution of a notary, Distressed Assets Recovery Unit applies to the notary with application on writs of execution within 5 (five) days after having made the decision.

Work with collateralized property

The Branch Manager/head of Security Unit controls keeping of the collateralized property on this stage.

On this stage Distressed Assets Recovery Unit can use additional measures on keeping collateralized property (attraction of third parties as a responsible keeper, additional inspection of the state of keeping collateral, etc.).

The activity of Distressed Assets Recovery Unit on this stage is controlled and reports to Bad Loan Committee and the Board Member (the Unit is subordinated to).

On this stage of work with debt, Distressed Assets Recovery Unit, including other units of the Bank (Legal Unit, Security Unit) uses the collection procedure in or out of the court.

Legal procedures (Legal debt collection):

  1. Submitting claim to the court on debt collection at the expense of selling the property collateralized under the Contract or at the expense of the Customer costs (guarantors, debtors);
  2. Appealing agreements concluded by the Customer without agreement with the Bank which influence on the Customer’s capability to fulfill obligations dually under the Contract  or pose risk to loss (impossible repossession) collateralized property;
  3. Submitting claims against the third parties, the actions/inactivity of which resulted in negative consequences (harm) being obstacles for the Bank as a Creditor to satisfy its requirements;
  4. Initiation of the Customer bankruptcy case;
  5. Submitting a civil claim in criminal cases.


Procedure on pre-trial regulation:

  1. Writs of execution of a notary on repossession of collateralized property under the Contract;
  2. Concluding of agreements with the third parties concerning the Customer’s debt under the Contract (assignment of right of demand, debt transfer);
  3. Satisfaction of the Bank’s requirements at the expense of collateralized property (receiving of collateral in the property of the Bank, sale of collateralized property by the Bank to the third parties, transfer of collateral to be managed by the Bank).

Final result of “Legal debt colection” stage is debt repayment by the Customer towards the Bank in full amount or compensation of unrecoverable debt.

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