PREVENTIVE RESTRUCTURING AS A LEGAL MECHANISM FOR PREVENTING FINANCIAL INSOLVENCY

Abstract

This article is dedicated to the examination of preventive restructuring as a legal mechanism for the prevention of financial insolvency. It analyzes the essence, significance, and advantages of preventive restructuring within the context of the contemporary economic environment, as well as the specific features of its legal and regulatory framework in Ukraine and the European Union. Particular attention is paid to the implementation of Directive (EU) 2019/1023 into national legislation, the identification of the main challenges of this process, and proposals for improving the legal mechanisms of preventive restructuring. The article provides a review of scholarly research and legal norms governing preventive restructuring. The study of academic sources indicates the necessity of harmonizing national legislation with European standards, as well as the need for additional mechanisms for monitoring and ensuring the implementation of restructuring agreements.It has been established that the Directive on Restructuring and Insolvency sets minimum standards for restructuring and certain insolvency matters; however, its harmonizing effect is limited due to the multiple implementation options, leading to a divergence in restructuring models across Europe. These options reveal differing political approaches to the regulation of restructuring and insolvency.Nevertheless, the implementation of the Directive’s provisions into Ukrainian legislation is accompanied by a number of difficulties, including the inconsistency of existing legal norms with European standards, the procedural rigidity of the preventive restructuring procedure, which resembles a «mini-bankruptcy», and the absence of clear guidelines and effective mechanisms regarding early warning tools. It has been established that preventive restructuring is a promising legal instrument for reducing the level of bankruptcies and improving the investment climate in Ukraine. Its further development and improvement will contribute to economic stability and enhance the competitiveness of Ukrainian enterprises.