Ukraine

There are three procedures in corporate insolvency: property administration, rehabilitation, and liquidation.

Property administration is the initial, court-supervised stage introduced upon opening the bankruptcy case, during which a property administrator is appointed to oversee and preserve the debtor’s assets, review creditors’ claims and prepare the case for transition to rehabilitation or liquidation (it is introduced for up to 170 calendar days).

The rehabilitation process aims to prevent the debtor from being declared bankrupt and subsequently liquidated. This stage aims to improve the debtor’s financial and economic condition and to satisfy creditors’ claims by restructuring the company’s debts and assets, and/or modifying its organisational, legal, and production structures. During rehabilitation, the members of the debtor’s executive body are suspended, with all authority transferred to a certified rehabilitation manager.

Conversely, the liquidation process focuses on identifying and recovering the debtor’s assets. It involves managing and disposing of the debtor’s property, which is often sold through auctions to settle the claims recorded in the creditors’ claims register.

During the preventive restructuring, the debtor receives the following protection:

• the insolvency proceeding cannot be commenced;
• the accrual of penalties and other financial sanctions on pre-existing obligations to involved creditors is suspended; and
• the disposal of the debtor’s property, increase (decrease) in the debtor’s charter capital or the withdrawal of a participant from the debtor only in accordance with the preventive restructuring plan.

The court may, at the request of the debtor, approve such additional measures:

• the prohibition of compulsory seizure of funds or property from the debtor on the basis of enforcement documents; and
• the prohibition on the enforcement of pledges and mortgages.

The protective measures can last up to six months during the preventive restructuring.

Upon opening bankruptcy proceedings, the commercial court introduces a moratorium on the satisfaction (enforcement) of creditors’ claims. While the moratorium is in effect, penalties (fines/penalty), other financial sanctions, and statutory additions such as the inflation indexation and the statutory 3% per annum are not applied to claims covered by the moratorium. As a general rule, the moratorium remains in place until the bankruptcy case is closed (with specific rules allowing earlier enforcement for secured creditors in certain circumstances). The moratorium does not apply to current (post-opening) claims, wage payments (and related statutory contributions), author royalties, compensation for injury to life and health, or alimony.

The moratorium on the satisfaction of secured creditors’ claims will be automatically terminated after the end of the property administration procedure if the court has not made a resolution to proceed to rehabilitation or liquidation procedures. Such termination will happen after 170 days of moratorium. Measures of protection (basic and additional) apply within the statutory maximum period and terminate upon plan approval, closure of the procedure, or expiry of the maximum term.

Ukrainian law allows two pre-insolvency procedures: preventive and financial restructuring.

Preventive restructuring is a universal procedure, which is regulated by Book 3 of the Bankruptcy Code of Ukraine. The Bankruptcy Code is described in more detail in this Question.

Financial restructuring is a specific procedure for the restructuring of the debt before the financial institutions and other involved creditors. There is a moratorium on the satisfaction of the creditors’ claims during the financial restructuring, except for claims agreed to be satisfied by the involved creditors. The financial restructuring shall result in approval of the restructuring plan. The restructuring plan is created together by the debtor and the creditors. The restructuring plan will be valid if all the creditors approve the plan. The cram down of creditors is possible if two-thirds of the involved creditors voted for the plan, and then the plan was approved during the arbitration. Creditors’ claims cannot be compromised without the consent of the creditors if these claims are fully secured by the pledge or mortgage. The financial restructuring procedure will be valid in Ukraine until 1 January 2028 (with a possibility of it being extended by the lawmakers).

The answers for the following Questions will relate to preventive restructuring as financial restructuring is a separate and rather narrow procedure, the peculiarities of which are described above.

3.1 What are the conditions to entry?

Preventive restructuring may be initiated only by the debtor who files the application to the commercial court. Under the Bankruptcy Code, creditors, members of the debtor’s management bodies and the debtor’s workers’ representative may, upon identifying signs of insolvency or its threat, initiate the question of applying preventive restructuring before the debtor. The debtor must consider such a proposal and notify the initiator of a reasoned decision within 30 days. The preventive restructuring is not available:

• to the debtors providing financial services;
• if the debtor was already undergoing preventive restructuring during the year immediately before the commencement of the new preventive restructuring proceeding; or
• if the debtor was liable for infringing bankruptcy legislation during the three-year period before the commencement of the preventive restructuring.

3.2 Can creditor claims be compromised “within a class”?

Yes. In preventive restructuring, claims can be varied through the plan, but approval requires class voting and court approval, not individual consents from each affected party creditor.

• Secured class. Approved if creditors with voting rights holding two-thirds by value of secured claims in that class vote in favour (interested secured creditors do not vote). If the plan changes the priority of secured claims, it must be approved by each affected secured creditor.
• Unsecured class. Approved if creditors holding more than 50% by value of unsecured claims in each class vote in favour.
• Budget/tax class. If the plan provides deferral/instalments/forgiveness and the terms for that class are not worse than for ordinary unsecured creditors, the collection authority does not vote, and the class is deemed to have approved; otherwise, approval requires over 50% by value.

Equal treatment within a class is mandatory: the plan cannot set a different proportional recovery within the same class unless all creditors made worse agree in writing.

3.3 Is there a “cross-class cram down”?

Yes. If the preventive restructuring plan is not approved by all creditor classes at the creditors’ meeting, the debtor may ask the commercial court to approve the plan despite dissenting classes (cross-class cram down). The court will approve such a cram down if:

• the procedural requirements for the creditors meeting to approve the preventive restructuring plan were met;
• the preventive restructuring plan is reasonable and can help to avoid insolvency;
• the plan was supported by creditor classes: either (1) a majority of classes, provided that one approving class is the secured creditors’ class; or (2) if that secured-class condition is not met, at least one voting class (other than the founders/shareholders class and excluding any class that would receive no recovery if the plan is rejected and the debtor proceeds to bankruptcy/closure of the preventive procedure);
• dissenting voting classes are treated no worse than classes of the same rank and better than any junior classes; and
• no creditor class may receive, as a result of implementing the preventive restructuring plan, more than the full amount of its claims included in the plan.

3.4 Can shareholder claims be compromised?

If the shareholders invest into the debtor according to the preventive restructuring plan, then their consent is obligatory. If there are any claims of shareholders as creditors, these claims can be compromised under the general rules described in Questions 3.2 and 3.3, above.

3.5 Can secured creditors’ claims be compromised? Are deficiency claims treated differently?

The secured creditors’ claims can be compromised according to the procedures described in Questions 3.2 and 3.3.

3.6 Can creditors propose competing plans?

No. Preventive restructuring is designed as a single-plan process. The plan is prepared through negotiations between the debtor and the involved creditors, but only the debtor may file the plan with the court and initiate its approval. As a result, creditors cannot submit competing plans on their own. They may influence the content of the plan during negotiations, but a parallel or creditor-initiated plan is not permitted unless the debtor consents to submit it.

3.7 What level of court or other third-party supervision is there of the process(es)?

The court and the restructuring administrator can supervise the processes during the preventive restructuring. The court shall:

• commence the preventive restructuring under the application of the debtor;
• appoint the restructuring administrator if needed;
• approve, if necessary, the bridge financing or the protection measures for the debtor;
• review the substance of the restructuring plan and the procedure of the negotiations between the creditors and the debtor;
• approve the cross-class cram down; and
• revise the execution of the restructuring plan based on the reports of the debtor or restructuring administrator.

The restructuring administrator shall:

• foster the negotiation between the creditors and the debtor;
• conclude on the compliance of the restructuring plan with the legislation, the probability of the execution of the plan and following the principle of the best interests of the creditors;
• report to the court if a procedural violation occurs; and
• review the business activity of the debtor during the preventive restructuring.

The Bankruptcy Code provides a detailed regime for challenging pre-insolvency transactions that diminish the debtor’s estate. Transactions carried out within three years prior to the opening of insolvency proceedings may be invalidated where they result in undervalue transfers, preferential payments, gratuitous disposals or transactions with related parties. In such cases, the court may restore the estate through mutual restitution and may also impose liability on persons who approved or executed the harmful transaction.

4.1 What is the applicable law that provides for clawback and/or antecedent transaction claims?

Clawback and antecedent transaction claims are governed by the Bankruptcy Code of Ukraine. The court has the possibility, upon request of an insolvency officer or a creditor, to invalidate transactions that harmed the debtor’s estate or prejudiced creditors, including undervalue transfers, early payments, security grants and dealings with interested parties.

4.2 What are the relevant “look-back” periods for claims?

The Bankruptcy Code applies a fixed three-year hardening period prior to the commencement of insolvency proceedings. Any transaction entered into during this period may be challenged if it falls within the statutory grounds, including transactions at an undervalue, preferential payments, or gratuitous transfers.

4.3 Who can pursue the claims?

Both the insolvency officer and creditors have standing to bring clawback actions during insolvency proceedings. Either may apply to the court to invalidate the relevant transaction and seek restoration of the debtor’s estate.

4.4 What remedies are available and how do they operate in practice?

Where a transaction is set aside, the Bankruptcy Code requires mutual restitution: each party must return what it received. If restitution in kind is not possible, the counterparty must compensate the market value. In addition, directors, shareholders or other controlling persons who approved such transactions may be subject to subsidiary liability for losses caused.

4.5 What defences are available?

The Code does not prescribe detailed statutory defences. In practice, parties defend clawback claims by demonstrating that the transaction did not reduce the estate, was concluded at market value, did not confer undue preference, or otherwise falls outside the Code’s exhaustive list of voidable acts.

4.6 Is there a general right of action in respect of transactions defrauding creditors or Actio Pauliana claims?

The three-year avoidance framework is broadly analogous to an Actio Pauliana-type remedy, allowing challenges to transactions that unjustifiably diminish the estate, including gratuitous transfers, early payments, security grants, and dealings with interested parties. Such actions seek the reversal and restoration of creditor equality.

4.7 Who can pursue the claims?

As with general avoidance actions, both insolvency officers and creditors may bring such claims before the court. Officers usually take the lead during the administration or liquidation stage, but creditors may initiate challenges directly if necessary.

4.8 What remedies are available and how do they operate in practice?

The primary remedy is invalidation of the transaction and mutual restitution. Additional consequences include reinstatement of assets into the estate and potential subsidiary liability of directors, shareholders, or controlling persons for losses caused by harmful or fraudulent dealings. These mechanisms support value recovery and deter asset stripping before insolvency.

4.9 What defences are available?

Defences align with those for standard clawback actions. The counterparty may argue that the transaction had no negative consequences for the debtor by reducing its assets or leading to its insolvency or inability to perform its obligations towards creditors, conferred fair value, was commercially justified, or falls outside the exhaustively listed grounds for avoidance.

Ukrainian law imposes significant responsibilities on directors, shareholders, and other controlling persons, particularly around timely initiation of insolvency and avoiding actions that worsen the debtor’s financial position. Liability may be joint and several for failure to file on time, or subsidiary where the director’s actions contributed to insolvency or losses arising from voidable transactions. Certain liabilities are suspended during martial law (imposed on 24 February 2022) only where (and to the extent that) the failure to act was caused by the armed aggression against Ukraine (e.g. where assets/operations are in hostilities or occupied areas).

5.1 What are the duties of directors and managers?

Directors must monitor solvency and are obliged to initiate insolvency proceedings within one month of becoming aware that satisfying one creditor would prevent meeting obligations to others. They must avoid engaging in transactions that diminish the estate or prejudice creditors, as such acts can trigger clawback and personal liability.

5.2 What claims can be brought against directors and managers arising from breaches of those duties?

Claims may include joint and several liability for failure to initiate insolvency proceedings on time and subsidiary liability where the director’s actions resulted in the debtor’s bankruptcy or losses associated with invalidated transactions. Directors, shareholders, and other controlling persons may be exposed.

5.3 Who can pursue the claims?

Claims may be pursued by the insolvency officer within the insolvency process, and creditors may also seek the imposition of liability, particularly where losses arose from invalidated transactions. The court may determine liability in connection with breaches identified during the proceedings.

5.4 Do directors have, at any time, a strict obligation to file for insolvency and, if so, when does that arise?

Directors must file within one month of becoming aware of the risk of insolvency. Failure to do so may result in joint and several liability for unsatisfied creditor claims. During martial law, liability is waived if the failure to file was caused by armed aggression, especially where assets are located in hostilities or occupied territories.

5.5 Can directors and managers be found liable for the increase in sums owed to creditors after a company becomes insolvent?

Ukrainian law does not have a standalone “wrongful trading/deepening insolvency” rule that automatically makes directors liable solely because debts increased after insolvency. In practice, liability can arise indirectly where:

• management breaches the one-month duty to file for bankruptcy once the statutory insolvency triggers arise (in which case management bodies may bear joint and several liability for unsatisfied creditor claims); and/or
• the debtor’s bankruptcy is found to have occurred through the fault of founders/controlling persons (including management), in which case subsidiary liability for the debtor’s obligations may be imposed where the estate is insufficient (typically measured as the difference between total creditor claims and the liquidation estate).

5.6 In what other circumstances can directors and managers be found liable directly to creditors of the company?

Directors and controlling persons may incur liability where they approved transactions later invalidated under the clawback regime or failed to file on time, resulting in unsatisfied claims. In both cases, personal liability may attach directly to losses caused to creditors.

Under the Bankruptcy Code, the rights and liabilities of the insolvency officer are set out in detail, including the authority to request, obtain, and verify all information necessary for the performance of insolvency proceedings. These statutory powers form the legal basis for the specific information-gathering mechanisms and obligations described in Question 6.1, below, which outlines how such authority is exercised in practice.

6.1 What information can be obtained by office holders in respect of a debtor’s property, information, and affairs?

In the performance of their duties, the insolvency officer has the right of direct access to information about debtors, their property, proceeds, and funds, including confidential information contained in state databases and registers, including electronic ones. The examples include information from the Real Property Registry, the Encumbrances Registry, the Debtors Registry, and the Unified State Register of Legal Entities, as well as data from banks, non-bank payment service providers, electronic money issuers, depository institutions, and other capital market participants regarding the existence and balances of the debtor’s accounts and electronic wallets, transactions, and fund movements therein, as well as any agreements for the storage of valuables or the lease of individual safe-deposit boxes.

6.2 How is that information obtained in practice?

In practice, insolvency officers usually obtain information by issuing a formal insolvency officer’s request to the relevant bodies and institutions. This request is used to collect case-related information and supporting documents needed to identify and administer the debtor’s assets and financial affairs.

6.3 Can the court assist in obtaining that information and how does that work in practice?

To gain the court’s assistance, the insolvency officer must ask for it themselves by filing an application to the court.

Chapter VIII of the Bankruptcy Code contains detailed provisions regarding recognition of foreign insolvency proceedings and insolvency practitioners and judicial assistance and cooperation, among other matters. 

7.1 Is the UNCITRAL Model Law on Cross-Border Insolvency adopted?

No. However, Ukraine has incorporated provisions similar to the UNCITRAL Model Law on Cross-Border Insolvency in Chapter VIII of the Bankruptcy Code, laying the groundwork for initiating ancillary insolvency proceedings against foreign debtors within its jurisdiction, as well as certain provisions regarding recognition of foreign insolvency proceedings and insolvency practitioners and judicial assistance and cooperation, among other matters.

7.2. Is it possible to recognise office holders from other jurisdictions?

Foreign court judgments (including the judgments of foreign insolvency courts) and foreign insolvency officers may be recognised in Ukraine:

• if there is a relevant international agreement between the respective foreign jurisdiction and Ukraine; or
• based on the reciprocity principle with a foreign jurisdiction (i.e. in the absence of the relevant agreement, Ukraine will recognise the court judgments of the particular foreign jurisdiction if Ukrainian court judgments are recognised in that jurisdiction).

7.3. What is the process and what are the conditions for recognition?

The procedure is as follows: the foreign insolvency officer shall submit to the commercial court conducting the bankruptcy proceedings a written application for recognition of the foreign bankruptcy procedure in which the officer was appointed, before that court decides on the merits (ratification of the rehabilitation or liquidation plan). The application for recognition of the foreign bankruptcy procedure shall be drawn up in the state (official) language of the state in which the foreign bankruptcy proceedings are conducted. The translation into Ukrainian shall be attached to the application.

Unless otherwise provided by an international treaty of Ukraine, the application for recognition of the foreign bankruptcy procedure must contain:

• the name of the commercial court with which it is filed;
• the name (title) of the foreign insolvency officer who submits the application, indicating their place of residence (stay) or location;
• the name (title) of a debtor, indication of its/their place of residence (stay) or location, or location of its/their property in Ukraine; and
• the content of and reasons for submitting the application.

Having established that the application and the documents attached to it are executed in accordance with the established requirements, the commercial court shall, not later than on the third day from the date of receipt of the application, pass a judgment on its acceptance for consideration.

From the date of filing the application for recognition of foreign bankruptcy procedure and until the relevant judgment, the commercial court shall, on the basis of a written application of the foreign insolvency officer, take measures to protect the debtor’s assets or creditors’ interests, in particular to ensure the collection of evidence or demand for information about the debtor’s assets, business transactions, rights, obligations, or responsibilities.

While this recognition mechanism is relatively newly established in Ukraine, there are already a number of court precedents applying it in practice.

7.4 What information can be obtained by office holders in respect of a debtor’s property, information, and affairs?

The Bankruptcy Code provides that cooperation with foreign courts and foreign insolvency officers can be carried out by transferring the information, if the transfer of such information is not prohibited by law (e.g. commercial secrets and know-how, state secrecy, certain protected personal data).

7.5 What steps can a foreign office holder take to recover assets belonging to the debtor?

After the recognition of the foreign bankruptcy procedure, except for cases provided for in the Bankruptcy Code, in order to protect the debtor’s assets or the interests of creditors, the commercial court may, on the basis of the application of the foreign insolvency, provide the following legal assistance:

• suspension of bankruptcy proceedings or other procedural actions regarding the assets, rights, obligations, or liabilities of a debtor, provided that all necessary measures have been taken to guarantee the satisfaction of creditors’ interests in Ukraine;
• suspension of the right to dispose of any assets of a debtor;
• continuation of the provision of legal assistance provided in accordance to the Bankruptcy Code; and
• provision of additional legal assistance in accordance with the legislation or international treaties of Ukraine.

7.6 Is a foreign office holder able to bring clawback claims or fraudulent transaction claims?

No, not directly. Under the Bankruptcy Code, avoidance (clawback/fraudulent transaction) claims are brought within a Ukrainian bankruptcy case and the direct applicant is the Ukrainian insolvency practitioner (arbitration manager) (and, where permitted, a creditor), not the foreign office holder. However, as a general rule, a foreign office holder may apply for recognition of the foreign proceeding and request judicial assistance under the cross-border chapter.

Under the Bankruptcy Code, insolvency office holders are admitted to practice based on a certificate and are recorded in the Unified Register of Insolvency Practitioners of Ukraine; only persons meeting the Code’s qualification requirements (including Ukrainian citizenship and passing the qualification process) may act.

They are regulated through state oversight and the self-regulatory organisation framework, including disciplinary procedures. The Code also requires compliance with the Code of Professional Ethics for insolvency practitioners and generally expects independence, good faith, and avoidance of conflicts of interest.

8.1 Can a foreign office holder take appointments?

No, as the Bankruptcy Code states that only a citizen of Ukraine may be an insolvency officer, while also complying to the requirements outlined in Question 8.2, below.

8.2 What are the conditions for becoming an office holder?

The insolvency officer may be a citizen of Ukraine who has a higher legal or economic education of the second (Master’s) level, general work experience of at least three years or at least one year after receiving the relevant higher education in management positions, completed training and internship during six months in the manner prescribed by the state bankruptcy authority, have a command of the state language, and have passed the qualifying examination. The right to carry out the activities of the insolvency officer shall be granted to a person who has received a relevant certificate in accordance with the procedures established and is entered in the Unified Register of Arbitration Managers of Ukraine.

In case of a foreign insolvency officer, their ability to operate covers only the proceeding in which they have been recognised by the Ukrainian court.

8.3 What are the main rules of professional conduct?

The rules are established in the Code of Professional Ethics of the Insolvency Officer. They include impartiality, confidentiality, integrity, and independence.