Reorganization and Bankruptcy of Credit Unions: National Characteristics and Experience of Economically Developed Countries

The COVID-19 pandemic and full-scale war have led to numerous challenges in the activities of credit unions, among which the dominant ones are the risk of bankruptcy, the search for sources of financing for reorganization, the problem of painless exit from the market and the effective implementation of the liquidation procedure to fully satisfy the claims of creditors. The article aims to identify the features of financial reorganization and the termination of the activities of credit unions as legal entities on a voluntary and compulsory basis under the martial law regime in Ukraine. To achieve this goal, the work, based on an analytical assessment of statistical data on global, pan-European and Ukrainian trends in the development of credit cooperation, identifies the determinants that determine the corresponding dynamics and reveals the legislative aspects of financial reorganization and bankruptcy of credit unions in Ukraine. In addition, the authors conduct a comparative analysis of advanced foreign experience in implementing legal procedures for the reorganization and bankruptcy of credit unions through the prism of its potential implementation in Ukraine. The study results show that, in contrast to the global rise of credit cooperation, processes are taking place in Europe and Ukraine that restrain or even reduce the scale of credit union activities. In Ukrainian legislation, legal norms regarding the procedure and features of implementing financial reorganization of credit unions are prescribed rather superficially, without proper specification. However, unlike other business entities, credit unions are cooperative financial institutions owned by their members, and this unique feature significantly complicates the process of restructuring their debts and limits the possibilities of accessing external sources of financing, such as international capital markets or investors. As evidenced by the foreign experience of reorganization, bankruptcy, and exit of credit unions from the market, the key determinants of the effectiveness of these processes are state financial support for anti-crisis programs, legislative regulation of a simplified bankruptcy model, the introduction of an early intervention system, the creation of consolidated mutual aid funds and a nationwide deposit guarantee fund, as well as innovative approaches to risk management using digital technologies.