Blocking of funds in the debtors' bank accounts

Pursuant to Article 18 of the Law of Ukraine "On Enforcement Proceedings" (the "Law"), the enforcement officer shall take measures to enforce the judgment in the manner and under the procedure established by the enforcement document and the Law.

Paragraph 1 of Part 1 of Article 48 of the Law stipulates that the enforcement of the debtor's property consists of its seizure, withdrawal (debiting of funds from accounts) and forced sale (presentation of electronic money for repayment in exchange for funds transferred to the relevant account of the state enforcement service body, account of a private enforcement officer).

Pursuant to Article 56(2) of the Law, the debtor's property (funds) shall be seized by the enforcement officer by issuing a resolution on the seizure of the debtor's property (funds) or on the inventory and seizure of the debtor's property (funds).

Paragraph 7 of Part 3 of Art. 18 of the Law stipulates that the enforcement officer, in the course of enforcement proceedings, has the right to seize the debtor's funds and other valuables, including funds held in cash, on accounts with banks, other financial institutions and bodies that provide treasury services to budgetary funds (except for funds on a single account opened in accordance with Article ³⁵¹ of the TCU, funds on taxpayers' accounts in the electronic value added tax administration system, funds on electronic accounts of excise tax payers, funds on

The resolution on the seizure of funds accounted for on the debtor's accounts in banking institutions shall state that the debtor's funds are seized, except for funds held on accounts, the seizure and/or foreclosure of which is prohibited by the Law.

Thelist of grounds for lifting the seizure of the debtor's property (funds) is set out in Article 59 of the Law, in particular, part two of the said article of the Law provides that the executor is obliged to lift the seizure of funds in the debtor's account no later than the next business day from the date of receipt from the bank of documents confirming that the funds in the account are prohibited from being recovered in accordance with this Law, as well as in the case provided for in paragraph 10 of part 1 of Article 34 of this Law.

At the same time, we would like to inform you that part 5 of Article 59 of the Law provides that the arrest may be lifted by a court decision.

It should be noted that the Law does not prohibit the foreclosure of funds of servicemen.

We would also like to inform you that the increase in the number of applications for seizure of debtors' funds and lifting of the seizure of funds on debtors' accounts was caused by the adoption of the Law of Ukraine "On 11.04.2023, the Verkhovna Rada of Ukraine adopted Law of Ukraine No. 3048-IX "On Amendments to Certain Laws of Ukraine on Certain Peculiarities of the Organization of the Enforcement of Court Decisions and Decisions of Other Bodies during Martial Law" (hereinafter - Law No. 3048-IX) (entered into force on 06.05.2023), which amended paragraph¹⁰² of Section XIII "Final and Transitional Provisions" of the Law.

This version changes the procedure for the disposal by individual debtors of funds seized by the state executive service or private executors during the period of martial law in Ukraine, introduced by the Decree of the President of Ukraine dated 24.02.2022 No. 64/2022.

The amendments stipulate, in particular, that temporarily, for the period until the martial law in Ukraine is terminated or lifted:

individuals - debtors whose funds are seized by the state executive service, private executors, may carry out expenditure transactions from the current account in the amount not exceeding two minimum wages established by the law on the State Budget of Ukraine as of January 1 of the current calendar year, as well as pay taxes and fees without taking into account such seizure, provided that such current account is designated for expenditure transactions in accordance with the procedure established by this Such account shall not be subject to foreclosure within the specified amount.

To determine such a current account with a bank, an individual debtor shall apply to the state enforcement service body or private enforcement officer that seized the individual debtor's funds with an application for determining the current account with a bank for carrying out expenditure transactions. The application may be submitted in paper form (by hand or by postal means) or in electronic form in compliance with the requirements established by the Law of Ukraine "On Electronic Documents and Electronic Document Management".

The application shall indicate the number of the current account that the individual debtor requests to be designated for the purpose of carrying out expenditure transactions and the name of the bank where such account is opened. The individual debtor is responsible for the accuracy of the information provided in the application.

Within two business days from the date of receipt of the relevant application of the individual debtor, the state or private enforcement officer shall issue a resolution on determining the current account of the individual debtor in the bank for the purpose of carrying out expenditure transactions and immediately, no later than the next business day after the resolution is issued:

• provides/sends the relevant resolution to the bank (servicing bank);
• checks for other enforcement proceedings opened against the individual debtor, and, if other enforcement proceedings are opened against the individual debtor, simultaneously submits/sends the relevant resolution to the state enforcement service or private enforcement officer that carries out enforcement in such enforcement proceedings. In this case, the current account specified in the relevant resolution is considered to be designated for the execution of expenditure transactions within such enforcement proceedings.