About 80% of problem borrowers in Ukraine intentionally do not repay loans
Many borrowers in Ukraine do not repay loans for reasons that are not related to their financial condition. In approximately 80% of cases, non-repayment of loans is due to the deliberate actions of the debtor, who intentionally does not return the loan. This was announced by Andriy Volkov, Managing Partner of Investohills Group of Companies.
“Usually, large borrowers who do not pay on loans are very rich people. They have shut down their main business, but they have a parallel business and hire the best lawyers to help them avoid paying back their debts. These are about 80% of the problem debtors, “ explains Andriy Volkov.
That is why Ukraine has formed one of the largest problem debt markets in Europe, where there are various schemes that allow unscrupulous borrowers not to repay loans.
“Debtors “transfer” assets, liquidate companies for which loans are issued, arrange fictitious bankruptcies. At the same time, the business can continue to operate; it is just that it has already been re-registered to other legal entities. All this happens because in the existing legal field of Ukraine, it is advantageous to go into arrears and not pay anything on the loan at all, delaying the processes in the courts. At the same time, lenders do not have the tools to automatically recover collateral, which would greatly facilitate the work with such borrowers,” comments Andriy Volkov.
It is especially difficult to obtain repayment of loans from large debtor companies, which use all their legal capabilities to challenge the creditor’s claims. As a result, if the borrower returns the debt, it is only a small part of it.
“The chances of resolving the situation with borrowers who have done everything to make it legally impossible to repay the debt are 10-20%. It is almost impossible to return anything from the conditional unsecured million issued to a certain enterprise that is no longer working. The borrower will pay a maximum of 1%, and then, if he wants. On average, the amount of repayment is 50% of the value of the collateral. Individual debts are repaid at 100%, and only if there is liquid collateral. At the same time, our company has its own mechanisms for working with problem borrowers, as a result of which we eventually achieve the return of all debts without exception,” says Andriy Volkov.