Ukraine 2026: The Evolving Toolkit for Investors and Creditors
September 2026
Almost four years into the full-scale invasion, Ukraine has moved from emergency measures to managed adaptation. For international investors, the practical question is no longer whether capital can move across the border, but under what conditions and through which structures.
The wartime capital-control regime has been steadily shifting toward liberalization, and a new generation of “incentive-based” exemptions, including the loan-linked cap introduced in January 2026, now allows companies to unlock liabilities that otherwise would have remained trapped. Ukraine has also introduced a preventive restructuring regime modeled on modern European restructuring frameworks, expanding the toolkit available in distressed and special-situations scenarios.
For capital markets and special-situations investors, the result is a market that remains heavily regulated but is materially more navigable than it was several years ago. The challenge has shifted from understanding what is prohibited to identifying which structures are achievable and can be executed efficiently in practice.
Against that backdrop, we set out three practical questions investors should consider when evaluating opportunities in Ukraine in 2026.
Ukraine’s Gradual FX Liberalization
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Ukraine’s Gradual FX Liberalization
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1. What Is the Impact of Exchange Restrictions and Capital Controls?
General
The foreign exchange (FX) regime remains one of the key considerations for investors evaluating opportunities in Ukraine. While the National Bank of Ukraine (NBU) has steadily liberalized the wartime restrictions introduced in 2022, the framework remains highly technical, and its practical application often depends as much on transaction structuring as on the underlying legal rules.
The direction of policymaking is clear and increasingly favors liberalization. However, the regime remains conditional and detail-driven, making early analysis of payment flows and exit mechanics a key part of transaction planning.
Within that framework, the principal standing exceptions currently permit cross-border transfers:
- By Ukrainian borrowers to service loans that (i) involve an international financial institution (IFI) or (ii) are granted with the participation of, or guaranteed or insured by, an eligible development finance counterparty, such as an export credit agency (ECA), a foreign state, or a foreign state-owned entity.
- To pay interest, subject to an all-in cap of 12% per year, and to repay principal on cross-border loans disbursed after June 20, 2023.
- On debt incurred before June 20, 2023, to pay up to €1 million per quarter, per loan agreement, of interest overdue for preceding periods and accrued between Feb. 24, 2022, and April 30, 2024, and to pay interest falling due after April 30, 2024, without a cap.
- To pay dividends to entities outside Ukraine of up to €1 million per month for dividends accrued from Jan. 1, 2023, onward.
- To pay dividends abroad sufficient to reimburse scheduled Eurobond coupon payments.
- To finance foreign branches and representative offices within a €1 million annual cap.
The New Incentive-Based Limits
The most significant recent development is a set of three “incentive-based” limits that permit payments above the standard caps. Over 2025-2026, the NBU layered in these discretionary limits, within which companies may make otherwise-restricted payments:
An investment-based limit equal to foreign currency invested in a Ukrainian company’s charter capital after May 12, 2025.
A charitable-based limit equal to amonts a company has donated since Aug. 7, 2025, to the NBU’s account supporting the Armed Forces of Ukraine.
A new borrowing-based limit, the “loan-linked cap,” effective January 2026.
The Loan-Linked Cap
The loan-linked cap is the most consequential for investors. It allows a company to use newly raised external debt to discharge existing liabilities that otherwise would remain trapped by Ukraine’s wartime foreign exchange restrictions.
A non-resident loan drawn after Jan. 1, 2026, that meets the criteria described below creates dedicated payment capacity equal to its principal amount, within which the borrower may settle a range of obligations that otherwise would remain restricted. These include legacy foreign debt, dividend repatriation above standard caps, and certain prewar commercial obligations.
Two mechanics drive the structuring analysis. First, for every euro applied to a legacy liability, the amount of new-loan principal that can be repatriated is reduced on a euro-for-euro basis. Interest, by contrast, remains payable on the full principal.
If a borrower draws a €10 million loan and uses part of that cap to clear €3 million of old dividends, only €7 million of loan principal can flow back through repayment, while the remaining €3 million effectively stays trapped until further deregulation.
Second, the loan must meet the NBU’s criteria, most notably the 12% all-in servicing cap. All payments must run through a single servicing bank, and purchased, rather than own, FX may be used for principal repayment only after the loan has been outstanding for at least one year.
Private-Sector Dividend and Interest Payments into Ukraine (2021-2027)
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Source: NBU staff estimates in the July 2025 Inflation Report.
The Loan-Linked Cap
The loan-linked cap is the most consequential for investors. It allows a company to use newly raised external debt to discharge existing liabilities that otherwise would remain trapped by Ukraine’s wartime foreign exchange restrictions.
A non-resident loan drawn after Jan. 1, 2026, that meets the criteria described below creates dedicated payment capacity equal to its principal amount, within which the borrower may settle a range of obligations that otherwise would remain restricted. These include legacy foreign debt, dividend repatriation above standard caps, and certain prewar commercial obligations.
Two mechanics drive the structuring analysis. First, for every euro applied to a legacy liability, the amount of new-loan principal that can be repatriated is reduced on a euro-for-euro basis. Interest, by contrast, remains payable on the full principal.
If a borrower draws a €10 million loan and uses part of that cap to clear €3 million of old dividends, only €7 million of loan principal can flow back through repayment, while the remaining €3 million effectively stays trapped until further deregulation.
Second, the loan must meet the NBU’s criteria, most notably the 12% all-in servicing cap. All payments must run through a single servicing bank, and purchased, rather than own, FX may be used for principal repayment only after the loan has been outstanding for at least one year.
Private-Sector Dividend and Interest Payments into Ukraine (2021-2027)
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Source: NBU staff estimates in the July 2025 Inflation Report.
Complementary 2025 Reforms
Two further 2025 reforms round out the toolkit: a debt-to-equity conversion mechanism allowing a non-resident’s loan claim to be converted into a charter-capital contribution, and permission to repay syndicated loans incurred before June 20, 2023, involving IFIs where investment-grade foreign banks are involved as lenders or arrangers.
Because the limits are aggregate and bank-administered, their sequencing and payment allocation are highly case-specific. Cash-flow modeling and early coordination with the servicing bank, including, where relevant, designating it as servicing bank for the legacy instruments, are now central to deal execution.
Complementary 2025 Reforms
Two further 2025 reforms round out the toolkit: a debt-to-equity conversion mechanism allowing a non-resident’s loan claim to be converted into a charter-capital contribution, and permission to repay syndicated loans incurred before June 20, 2023, involving IFIs where investment-grade foreign banks are involved as lenders or arrangers.
Because the limits are aggregate and bank-administered, their sequencing and payment allocation are highly case-specific. Cash-flow modeling and early coordination with the servicing bank, including, where relevant, designating it as servicing bank for the legacy instruments, are now central to deal execution.
2. Is It Practically Possible to Enforce in Ukraine on a Default?
Enforcement against a Ukrainian borrower remains possible, but investors should have realistic expectations. In many situations, successfully pursuing claims through the courts can be considerably easier than realizing value and repatriating proceeds.
As a result, any successful enforcement strategy will require a broader assessment of recoverability, timing, and practical execution risks rather than a purely legal analysis.
Enforcing Over Collateral
Realization can be difficult where there is no liquid market for the relevant asset class, and third-party pre-emptive rights, such as pre-emption rights of parties over a pledged participatory interest in a limited liability company or lease rights of parties over the asset, may attach to certain assets. Creditors should value and stress-test the saleability of collateral before settling on a strategy and consider exploring enhanced contractual options in advance.
Repatriating Enforcement Proceeds
Converting and transferring abroad the proceeds of enforcement requires NBU-compliant routing and stakeholder cooperation and may be unavailable in the absence of proper exemptions.
Payments Under Suretyships or Guarantees
Cross-border FX payments under suretyships covering the obligations of non-Ukrainian obligors are generally not permitted. The NBU’s principal exemption relates to sureties for eligible new-money loans raised by Ukrainian borrowers.
Foreign Judgments and Arbitral Awards
It remains uncertain whether cross-border payments to satisfy foreign judgments or awards are permitted under the martial-law FX rules.
Security Registration and Renewal
Registration establishes priority and insolvency recognition. A pledge over movables is registered for five years and must be renewed before expiration. Lapse does not extinguish the pledge but can subordinate the creditor to later registered creditors.
The new preventive restructuring procedure, discussed further below, can offer a court-supervised alternative to contested enforcement, particularly in cases where a negotiated, plan-based outcome may preserve more value than piecemeal enforcement.
Enforcing Over Collateral
Realization can be difficult where there is no liquid market for the relevant asset class, and third-party pre-emptive rights, such as pre-emption rights of parties over a pledged participatory interest in a limited liability company or lease rights of parties over the asset, may attach to certain assets. Creditors should value and stress-test the saleability of collateral before settling on a strategy and consider exploring enhanced contractual options in advance.
Repatriating Enforcement Proceeds
Converting and transferring abroad the proceeds of enforcement requires NBU-compliant routing and stakeholder cooperation and may be unavailable in the absence of proper exemptions.
Payments Under Suretyships or Guarantees
Cross-border FX payments under suretyships covering the obligations of non-Ukrainian obligors are generally not permitted. The NBU’s principal exemption relates to sureties for eligible new-money loans raised by Ukrainian borrowers.
Foreign Judgments and Arbitral Awards
It remains uncertain whether cross-border payments to satisfy foreign judgments or awards are permitted under the martial-law FX rules.
Security Registration and Renewal
Registration establishes priority and insolvency recognition. A pledge over movables is registered for five years and must be renewed before expiration. Lapse does not extinguish the pledge but can subordinate the creditor to later registered creditors.
The new preventive restructuring procedure, discussed further below, can offer a court-supervised alternative to contested enforcement, particularly in cases where a negotiated, plan-based outcome may preserve more value than piecemeal enforcement.
3. What New Restructuring Tools Are Now Available?
Consensual workouts remain the primary restructuring tool for Ukraine-exposed credits. Standstills, amend-and-extend transactions, and broader liability-management exercises continue to provide the most flexible route to preserving value while avoiding a formal insolvency process.
Alongside these long-standing tools, Ukraine introduced a preventive restructuring procedure in January 2025 to implement1 European Union (EU) Directive 2019/10232. It replaced the old pretrial rehabilitation process and allows a debtor facing the threat of insolvency to bind dissenting creditors through a court-approved plan before formal insolvency without interrupting its business.
Its principal features are as follows:
3. What New Restructuring Tools Are Now Available?
Consensual workouts remain the primary restructuring tool for Ukraine-exposed credits. Standstills, amend-and-extend transactions, and broader liability-management exercises continue to provide the most flexible route to preserving value while avoiding a formal insolvency process.
Alongside these long-standing tools, Ukraine introduced a preventive restructuring procedure in January 2025 to implement1 European Union (EU) Directive 2019/10232. It replaced the old pretrial rehabilitation process and allows a debtor facing the threat of insolvency to bind dissenting creditors through a court-approved plan before formal insolvency without interrupting its business.
Its principal features are as follows:
A debtor-Driven, Court-Approved Plan
The procedure is initiated by the debtor or, for state-owned enterprises, by the property owner. The debtor may file a plan with the court even without prior creditor agreement. The debtor also designates the creditors to be involved and groups them into classes, typically secured, unsecured, and related, or “interested,” creditors.
Approval and Cram-Down
A plan is approved where all creditor classes support it and at least two-thirds of the involved creditors vote in favor. If not all classes approve, the court may nonetheless confirm the plan by cross-class cram-down where the statutory conditions are met. Broadly, this requires either a majority of classes to support the plan, including the secured class, or at least one class receiving a meaningful recovery to support it. Once approved, the plan binds all involved creditors, including those who voted against it.
Protections While the Procedure is Pending
On commencement, new bankruptcy filings are barred, the accrual of penalties and financial sanctions on involved-creditor claims is suspended, and asset transfers and changes to the debtor’s corporate structure are prohibited except as contemplated by the plan. The court may also impose a moratorium of up to three months, extendable to six, on enforcement, including enforcement of judgments and awards through the state enforcement service or private bailiffs and enforcement against pledged or mortgaged assets.
A Defined Timetable
The court must approve the plan within 12 months of the opening of proceedings. If it does not, the procedure may be terminated.
A debtor-Driven, Court-Approved Plan
The procedure is initiated by the debtor or, for state-owned enterprises, by the property owner. The debtor may file a plan with the court even without prior creditor agreement. The debtor also designates the creditors to be involved and groups them into classes, typically secured, unsecured, and related, or “interested,” creditors.
Approval and Cram-Down
A plan is approved where all creditor classes support it and at least two-thirds of the involved creditors vote in favor. If not all classes approve, the court may nonetheless confirm the plan by cross-class cram-down where the statutory conditions are met. Broadly, this requires either a majority of classes to support the plan, including the secured class, or at least one class receiving a meaningful recovery to support it. Once approved, the plan binds all involved creditors, including those who voted against it.
Protections While the Procedure is Pending
On commencement, new bankruptcy filings are barred, the accrual of penalties and financial sanctions on involved-creditor claims is suspended, and asset transfers and changes to the debtor’s corporate structure are prohibited except as contemplated by the plan. The court may also impose a moratorium of up to three months, extendable to six, on enforcement, including enforcement of judgments and awards through the state enforcement service or private bailiffs and enforcement against pledged or mortgaged assets.
A Defined Timetable
The court must approve the plan within 12 months of the opening of proceedings. If it does not, the procedure may be terminated.
It remains to be seen how the regime will perform in practice. Experience to date is very limited, and the procedure has yet to be tested in a significant cross-border case or adopted at scale.
Nonetheless, it considerably widens the restructuring toolkit available for Ukraine-exposed situations, importing concepts that are long familiar from U.S. Chapter 11 cases and English schemes of arrangement and restructuring plans, including a debtor-driven plan, class voting, and cross-class cram-down.
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