Key aspects of the bankruptcy procedure in Ukraine

Bankruptcy proceedings are a rather complex process that used to take years to complete. Consequently, they were unattractive to legal entities. On 21 October 2019, Ukraine’s new Code of Bankruptcy Proceedings came into force, introducing significant changes. For example, bankruptcy proceedings for individuals have now become possible, and the time taken to hear cases has been reduced by cutting down on the number of appeals.

What points should be considered before starting bankruptcy proceedings?

Resolving the crisis situation of legal entities and individuals through bankruptcy offers the opportunity to relieve the debtor of accumulated debts. Once the issues have been resolved, legal entities can attract investors or implement measures to promote the company’s financial growth, whilst individuals can restore their solvency.

Key points regarding declaring oneself or one’s business bankrupt:

• Unscheduled tax audit of the business. As soon as the commercial court has issued a ruling to initiate bankruptcy proceedings, a visit from the tax authorities can be expected. If violations are found, a fine is imposed.
• Sale of assets. This applies to both legal entities and individuals. The proceeds are used to repay debts to creditors.
• Initiation of bankruptcy proceedings. A creditor does not have the right to initiate bankruptcy proceedings, even in the case of very large debts owed by an individual. If the debtor is unable to cover their debts with their assets, then the debts are simply written off. The situation is different for legal entities – a claim from a single creditor is sufficient for the commercial court to initiate bankruptcy proceedings.
• Minimum debt threshold. Legal entities may only initiate bankruptcy proceedings if their debt amounts to 300 times the minimum wage or more. For individuals, the amount is lower – 30 times the minimum wage or more.

If you are unsure how to begin the bankruptcy process, consult the experienced lawyers at Svarog. You may be able to find other ways to resolve your problem.