Reduction, Offset, Discounting and Remission of Debts
As a rule, the schemes of offset of debts of businesses are quite complicated and require application of the set of actions to provide for their successful implementation. By way of example, below indicated are some instruments used for settlements in the energy sector:
1. The Cabinet of Ministers of Ukraine and the National Bank of Ukraine approved with their Resolution of 19 April 1999 No 621 the “Procedure of Offsetting the Overdue Mutual Debts of Enterprises, Undertakings and Organizations of the Energy, Coal and Gas Sectors”. The specific nature of this procedure is in the fact that the offset of the overdue debts of enterprises takes place without issuance of securities by means of one-day crediting of the offset participants by commercial banks. The offset provides for effecting clearing settlements, under which the mutual claims and liabilities of debtors and creditors are redeemed in equivalent amounts. The banks are active participants and coordinators of offsets of this kind, as they ensure that the settlements are effected within one banking day. The offset takes place by means of moving the funds on accounts of enterprises opened for this specific purpose; at that, the rules of the indisputable writing off of the funds under priority claims of creditors do not
apply to these accounts.
1. Resolution of the CMU “On Effecting Settlements for the Consumed Electric and Thermal Power” of 4 June 1999 No 975 establishes that the centralized settlements under debts of this kind may be effected:
- by means of writing off relevant amounts of accounts receivable and accounts payable of the settlement participants according to the notices of the Ministry of Energy;
- according to the settlement protocols;
- by means of treasury bills via Ukrspetsfin without payment for its services.
Hereafter, it was clarified by Resolution of the CMU “On Regulating Settlements at Electric Power Wholesale Market” of 19 April 1999 No 622 that only bills of the State Treasury and local authorities may be used to effect settlements for the electric power purchased at the electric power wholesale market with the exception of bills issued prior to effectment of the above resolution and entered into Inventory Register, approved by the Ministry of Energy on 30 April 1999.
Thus, the issue of offsets and settlements in any individual sector of the national economy should be solved on a specific and integral basis, taking into account requirements of the legislation valid exactly at the time of effecting the settlements.