Restructuring as a form of settlement of problematic credit debt of banking institutions

Abstract

Definitions of credit debt restructuring of banking institutions provided in several legal acts are summarized. They are reduced to changing the essential conditions of the current credit agreement to soften the requirements for the borrower in connection with his financial difficulties, the need to create favorable conditions for him to fulfill his credit obligations. The objects of restructuring under the credit agreement are: interest rate; forgiveness of part of the debt; his debt repayment schedule; terms and amounts of repayment of the main part of the loan, fees, etc. Restructuring of the bank is defined as a set of measures aimed at improving the financial condition, increasing the liquidity and solvency of the bank, carried out in the form of reorganization of the bank, change of owner, management, acceptance of debt obligations by the investor, rehabilitation, merger, division, merger, absorption at the stage, that precedes the recognition of the bank as bankrupt and the NBU's decision to liquidate it. Objects of restructuring can be: bank, enterprise, borrower's debts, tax debt, debt obligations, investment project, tax debt, debt obligations for borrowing, debt for issuing bonds. Restructuring of problematic credit debt is a type of restructuring of the borrower's debts by concluding an additional agreement with the borrower, settlement agreement, financial restructuring. The latter is the most common and is a form of economic recovery of borrowers who are in critical financial condition; changes in the conditions and repayment terms of credit obligations; ensuring borrowers' access to financing to restore their economic activity. Subjects and forms of financial restructuring are systematized. The essence of financial restructuring as an out-of-court procedure through negotiations between the borrower, his related persons and involved creditors is determined. The conditions for the borrower's participation in financial restructuring have been diagnosed, and the mechanisms for its initiation and implementation have been formalized. The responsibilities of the borrower in terms of the development and implementation of the restructuring plan are described.