Safeguarding creditors and resolving debtors’ complex challenges

Over 2,000 business bankruptcy filings are made in Ukraine annually, while only a few are being revoked due to solvency recovery. The Ukrainian jurisdiction witnesses many bankruptcies, with companies using limited tools to recover once the bankruptcy proceedings have commenced. This results in substantial payment defaults jeopardising primarily the interests of private and state creditors.

Bankruptcy is often used as a scheme to gain control over an enterprise by identifying and acquiring the debtor's outstanding debts and avoiding liability to creditors. It is also pursued to hide records of other disruptive actions, such as deviating from credit and other obligations, withdrawing assets, and liquidation.

However, following the entry into force of the Bankruptcy Code of Ukraine at the end of 2019, it has become possible to counteract the usual schemes of asset withdrawal and alienation of debtors’ property through fictitious trading organizations. Creditors may recover their funds due from debtors, as well as enjoy more extensive protection of their rights. Accordingly, after introduction of the full subsidiary liability, the accountability of managers and debtors’ owners has been enhanced.

PRACTICES