PECULIARITIES OF FINANCIAL RESTRUCTURING MECHANISMS OF CREDIT DEBT OF BANKING INSTITUTIONS AND AVIATION ENTERPRISES UNDER MARTIAL LAW

Abstract

This study explores the functioning of financial restructuring mechanisms for the loan obligations of banking institutions and enterprises during martial law. It argues that wartime conditions have substantially reshaped the assessment of credit risk and borrower solvency, transformed cash-flow patterns, and changed the approaches used to resolve distressed debt. In an environment marked by instability and uncertainty, restructuring increasingly depends on flexible and adaptive instruments capable of addressing both external shocks and internal financial pressures. The paper reviews the Ukrainian legal and institutional framework for financial restructuring and systematizes its main instruments, including preventive restructuring procedures. It also considers the specifics of applying these instruments to enterprises operating in different sectors of the economy. Particular emphasis is placed on the role of government regulation and public support measures in sustaining business activity, mitigating lending risks, and broadening access to finance. The aviation industry is examined separately as one of the sectors most severely affected by wartime restrictions owing to logistical disruption, declining demand, airspace closure, and heightened operational risk. Under such conditions, aviation enterprises require tailored restructuring solutions that reflect sector-specific constraints and the prolonged nature of recovery. The practical significance of the study lies in the possibility of using its conclusions to improve restructuring decisions in sectors with prolonged recovery periods, high capital intensity, and elevated exposure to wartime uncertainty. The study shows that successful restructuring should balance the interests of banks, enterprises, and the state and should rely on timely action, flexibility, sound risk evaluation, and effective financial planning. It is concluded that further development of restructuring mechanisms in Ukraine should be linked to early identification of financial distress, scenario-based planning, risk-sharing arrangements, and targeted solutions for the sectors most vulnerable to wartime shocks.