A change in the political situation in Ukraine, a change of government, and military operations in the east of the country have all resulted in an increase in defence spending, the destruction of production capacities, infrastructure and transport, the loss of the ability to use land, and a decrease in the population. The above factors have a negative impact on the GDP indicator and the national economy as a whole and this, in turn, negatively impacted business entities with respect to which bankruptcy proceedings were initiated.
The current legislation on restructuring proceedings in Ukraine is mainly aimed at protecting the interests of debtors, which, with the high level of corruption in the country, has led to a low level of satisfaction of creditors’ claims (namely, from 6–9%).
The adopted Bankruptcy Proceedings Code, which came into force on 21 October 2019, contains structural changes in bankruptcy proceedings and is aimed at increasing their efficiency and effectiveness. The implementation of this Code will also launch a private bankruptcy mechanism, which is also important because it will make it possible to resolve various situations with the restructuring of mortgage loans denominated in foreign currency. At the moment, there is a legislatively established moratorium on the forced recovery of debt under the foreign currency mortgage loans of individuals.
No official statistics on the status of the restructuring and insolvency market in Ukraine are available. According to market participants, the following indicators reflect the current situation in insolvency resolution:
These modest indicators were reflected in Ukraine's low Doingbusiness ranking (https://www.doingbusiness.org/en/rankings). In terms of resolving insolvency, Ukraine is ranked 145th out of 168 countries.
After public institutions, the National Bank of Ukraine, the Deposit Guarantee Fund etc, began the sale of bank assets through auctions (mainly corporate sector debts), to remove insolvent banks from the market in the bank debt sector restructuring market, state institutions, the level of access of potential participants to the troubled debt market has significantly increased.
The sale of debts through auctions has contributed to the transparency of this market and the sale of these assets has increased the level of income of insolvent banks.
In Ukraine, the issues of restructuring, reorganisation, insolvency and liquidation are regulated by the following laws and regulations:
A bankruptcy procedure initiated by the debtor’s director, where the satisfaction of the claims of one or more creditors makes it impossible for the debtor to completely fulfil its monetary obligations to other creditors, is a voluntary judicial procedure within the framework of which the debtor is financially rehabilitated or declared bankrupt.
Forced official reorganisation refers to the reorganisation of a monopolist legal entity by division, in accordance with the decision of the Antimonopoly Committee of Ukraine, in connection with violation of current competition legislation.
A bankruptcy procedure initiated by the debtor’s creditor is a forced judicial procedure within the framework of which the debtor is financially rehabilitated or declared bankrupt.
The Bankruptcy Procedures Code of Ukraine obliges the company, represented by its director, to file a petition with the economic court seeking to initiate bankruptcy proceedings if there is a threat to the company’s solvency.
The current legislation of Ukraine provides for a one-month period for filing a petition with the economic court seeking to initiate bankruptcy proceedings due to the threat of insolvency.
The definition of the threat of insolvency is contained in two articles of the Code, in particular: the threat of insolvency arises when the satisfaction of claims of one or more creditors leads to the debtor’s inability to fulfil its monetary obligations to other creditors in full; and the threat of insolvency is defined as a situation in which other circumstances confirm that the debtor will not be able to fulfil its monetary obligations or make ordinary current payments in the near future.
The Code also establishes that if the debtor’s director violates these requirements and fails to file the corresponding petition with the court in a timely manner, the director will be held jointly and severally liable for the failure to satisfy the claims of the creditors.
The Bankruptcy Procedures Code of Ukraine requires the debtor’s director to perform mandatory actions within the established timeframe, with a view to initiating the procedure recognising the insolvency of the company.
The debtor’s director is obliged to file a petition seeking to initiate bankruptcy proceedings on behalf of the debtor with the economic court at the debtor’s location no later than one month after identifying the threat of insolvency.
The legislator has established a number of requirements regarding the mandatory content of the petition and its required list of annexes.
Under applicable provisions of the Bankruptcy Procedures Code of Ukraine, creditors are entitled to initiate bankruptcy proceedings with respect to the debtor along with the debtor, for whom the initiation of proceedings is obligatory.
In order to initiate bankruptcy proceedings, creditors have the right to file a corresponding petition with the economic court in the established procedural form. The ground for filing this petition is the debtor’s inability to fulfil its matured property obligations to the creditor.
The Bankruptcy Procedures Code allows a creditor to combine any and all cash claims against the debtor, on various legal grounds, into a single petition. The legislation also allows several creditors to combine their monetary claims and to file a joint petition on behalf of all the creditors.
Initiation of voluntary and compulsory insolvency procedures requires the fact of “the debtor’s insolvency”, which is confirmed by the debtor’s inability to fulfil its matured obligations to the creditor. The verification of the validity of the applicant’s claims, as well as approval of the grounds for initiating bankruptcy proceedings, are carried out by the economic court in accordance with the procedure established by applicable provisions of the Bankruptcy Procedures Code of Ukraine.
The bankruptcy regime/procedure with respect to both legal entities and private individuals is regulated by the Bankruptcy Proceedings Code of Ukraine.
Furthermore, the current legislation of Ukraine has established special legal rules applicable to financial institutions, insurance companies, and joint stock companies that are regulated by applicable provisions of the Law of Ukraine “On Banks and Banking Activities”, the Law of Ukraine “On the System of Guaranteeing Deposits of Private Individuals”, the Law of Ukraine “On Joint Stock Companies”, the Law of Ukraine “On Mortgage Bonds”, the Law of Ukraine “On Insurance”, as well as other laws and regulations that govern this area of activity.
Despite the fact that the debtor is the party assigned the role of the initiator of a financial restructuring procedure, it is important that the creditors agree to carry out the restructuring in order for the debtor’s petition to be accepted and the procedure initiated. Moreover, in addition to the creditors' consent, the debtor will also be required to obtain the approval of the bank or other financial institution whose claims against the debtor amount to at least 50% of all the monetary claims of the creditors. Therefore, the debtor will have to carry out significant preparatory work with its creditors and the bank to which it has significant financial obligations if financial restructuring proceedings are to be initiated.
It is important to note the absence of legal requirements for mandatory consensus-based restructuring negotiations before the commencement of the official “prescribed process” in Ukraine.
In accordance with the current legislation of Ukraine, the following bankruptcy proceedings are applied to the debtor:
Depending on the category, the type of activities, and the availability of property of the debtor, the economic court applies a general, special or simplified procedure for bankruptcy proceedings.
It is important to note that the debtor’s financial rehabilitation and voluntary settlement are the co-ordinated processes of the debtor’s restructuring; prior to being approved by the court, these processes require that the interests of all parties to the proceedings be respected.
The current legislation of Ukraine does not establish any high-priority rights for investors who invest new funds in a debtor in bankruptcy proceedings. At the stage of implementation of the approved rehabilitation plan, the debtor is provided with the opportunity to obtain a loan to pay severance pay to its employees who are dismissed. The loan is repaid by using the funds obtained from the sale of the debtor’s property, which are sent for the purpose of repaying the loan out of turn.
Rights, obligations and the procedure for exercising the powers of creditors in bankruptcy proceedings are determined by applicable provisions of the Bankruptcy Procedures Code of Ukraine.
The Bankruptcy Procedures Codeprovides for an extrajudicial (pre-trial) debt financial restructuring or settlement, namely the debtor’s financial rehabilitation prior to initiating bankruptcy proceedings.
By the decision of the founders (participants/shareholders), the debtor has the right to initiate a financial rehabilitation procedure prior to initiating bankruptcy proceedings by drawing up a financial rehabilitation plan, which includes the amount, the repayment procedure, and the date of maturity of claims of creditors, with its further co-ordination with creditors.
The Bankruptcy Procedures Code provides that the property that is the subject of collateral for the secured creditor may be claimed by the specified creditor.
The current legislation of Ukraine regulating the sphere of bankruptcy classifies secured creditors in a separate category, which includes creditors whose rights and claims are secured by a collateral of the debtor’s property.
Funds received from the sale of the above collateral are allocated exclusively to repay the claims of the creditor whose claims are secured by this property.
Secured creditors have the ability to block the process of approval of a financial rehabilitation plan. The financial rehabilitation plan must be approved by two thirds of the votes of all the secured creditors involved in the financial rehabilitation.
The following deadlines apply within the framework of the bankruptcy proceedings of debtors:
It should be noted that the current legislation of Ukraine contains no legislative requirements or obstacles that apply to foreign secured creditors. This means that foreign secured creditors have the same rights as secured resident creditors of Ukraine under the current legislation.
Secured creditors have the right to extraordinary repayment of their claims at the expense of the collateralised property of the bankrupt. This means that funds received from the sale of the secured property are used exclusively to repay the creditor’s claims secured by the property being sold.
An important feature is that an arbitration director is obliged to agree to the conditions for the sale of the collateralised property with the secured creditors.
The priority right of secured creditors in bankruptcy proceedings consists in the possibility of paying off their claims at the expense of the collateralised property of the bankrupt, outside of the normal schedule. At the same time, the repayment to unsecured creditors is implemented in accordance with the priority procedure regulated by the Bankruptcy Procedures Code of Ukraine.
Creditors whose claims are not secured by collateralised property participate in bankruptcy proceedings from the moment of recognition of their claims by the economic court and until the payment of such claims or the finalisation of the debtor’s bankruptcy.
Where insufficient funds are received from the sale of the property of the bankrupt party for the complete repayment of all claims of the same priority, claims will be satisfied in proportion to the amount of the claims of each creditor of the same priority.
Claims that are not satisfied due to insufficiency of property will be deemed cancelled.
Where a voluntary settlement agreement is concluded by and between the debtor and its creditors within bankruptcy proceedings, the conditions established for unsecured creditors who have not participated in the voting, or who have voted against the conclusion of a voluntary settlement agreement, must not be worse than the conditions established for creditors who have agreed to the conclusion of the voluntary settlement agreement whose claims are classified as claims of the same line.
Creditors whose claims are not secured by collateralised property participate in all bankruptcy proceedings and are entitled, as parties to the economic proceedings, to appeal the decision of the economic court to close the bankruptcy proceedings in connection with the approval of a voluntary settlement agreement, as well as the ruling of the economic court declaring the debtor bankrupt and opening a liquidation procedure.
The current legislation of Ukraine provides for the possibility of seizing the debtor’s property pending adjudication as security for claims.
The current legislation of Ukraine has established a deadline for the debtor to perform the court ruling, counted from the effective date of the ruling or the expiration of the performance deadline set in the case of postponement or extension, or from the next day after the date of the corresponding court ruling if the latter is subject to immediate enforcement.
According to the current legislation of Ukraine, any and all business entities are endowed with the same rights and remedies regardless of their type of economic activity.
There are no obstacles, special procedures or protections applicable to foreign creditors in Ukraine.
Applicable provisions of the Bankruptcy Procedures Code of Ukraine establish that the repayment of creditor claims is carried out in the first, second, third, fourth, fifth and sixth lines.
The creditor claims of each subsequent stage are subject to satisfaction upon receipt of money from the sale of the bankrupt party’s property to the debtor's account after the full satisfaction of claims of the previous stage, except as otherwise provided by the current legislation.
Repayment of the claims of secured creditors at the expense of the bankrupt party’s collateralised property in bankruptcy proceedings is implemented outside the normal schedule.
In accordance with the current legislation of Ukraine, repayment of claims is done in the following order: claims relating to the payment of wage arrears to working and laid-off employees of the bankrupt party, as well as other payments payable to employees; claims of creditors under insurance contracts; costs associated with bankruptcy proceedings in court and the work of the liquidation commission.
Repayment of the claims of secured creditors at the expense of the bankrupt party’s collateralised property in bankruptcy proceedings is implemented outside the normal schedule.
The Bankruptcy Code of Practice provides for the possibility of financial restructuring in relation to legal entities – for persons through the debtor’s reorganisation procedure, and for individuals through the implementation of the debtor’s restructuring plan. There is no possibility of signing a settlement agreement.
Simultaneously with the opening of proceedings in a bankruptcy case, a moratorium on satisfying creditors’ requirements is introduced.
The appointment of a property manager is not a basis for terminating the powers of the debtor's manager or managerial body. At the same time, the powers of the head or governing body of the debtor may be terminated if they do not apply measures to preserve the property of the debtor, if they create barriers to the property manager or commit other violations of the law.
From the moment of initiation of a financial rehabilitation procedure by the court, the director of the debtor will be dismissed, and the management of the debtor will be transferred to the rehabilitation manager.
One of the ways to return the debtor to solvency, which is included in the financial rehabilitation plan, may be to obtain a loan to pay severance pay to the debtor’s employees resigning according to the financial rehabilitation plan.
Applicable provisions of the Bankruptcy Law provide for the following categories of creditor claims within a company restructuring or reorganisation procedure: competitive, collateralised, and current.
Within the framework of a bankruptcy case, creditors have procedural rights to influence the course of the bankruptcy proceedings by adopting appropriate decisions by the creditors' committee, participating in court hearings, and appealing against illegal actions of arbitration managers and procedural documents of the court.
All claims of dissenting creditors or a dissenting class of creditors must be taken into account when concluding a settlement agreement. At the same time, the conditions established for creditors who did not participate in the voting, or who voted against the conclusion of a voluntary settlement agreement, must not be worse than the conditions established for creditors who agreed to the conclusion of the voluntary settlement agreement whose claims are classified as claims of the same line. Approval of a settlement agreement requires the consent of all the secured creditors.
The current legislation of Ukraine provides for the possibility of assignment of the right of claim from one creditor to another. Recognition of the transfer of the right of claim to a new creditor is carried out by the economic court by adopting an appropriate ruling.
There are currently no restructuring procedures in Ukraine aimed at reorganising a corporate group and improving management efficiency.
The sale of the debtor’s property within the scope of bankruptcy proceedings is carried out in accordance with the procedure established by the Law through tendering in the form of an auction, with the exception of property to be sold by means of closed tendering. All types of the debtor’s property are subject to sale, with the exception of rights and obligations that cannot be transferred to other persons.
In the procedure for managing the debtor's property, operations using the assets of the debtor are carried out in agreement with the arbitration manager, who acts as the manager of the property of the debtor. In the process of reorganisation and liquidation of the debtor, the possibility of disposing of assets is presented only to the arbitration manager, who has the powers of the rehabilitation manager and the liquidator.
Secured creditors have the right to extraordinary repayment of their claims at the expense of the collateralised property of the bankrupt. The court-appointed administrator must obtain approval of the conditions of sale of the collateralised property of the debtor from the relevant secured creditor or the court.
Within a financial rehabilitation procedure, the presence of investors requires a financial rehabilitation plan to ensure the attraction of new investments. Investors are persons who have decided to contribute their own, borrowed, and attracted property and intellectual values to investment instruments.
The owner of the property of the debtor has the right to simultaneously satisfy all claims of the bankruptcy creditors or to provide the debtor with funds to satisfy all claims at any time before the end of the liquidation procedure.
Creditors have the right to file claims against the debtor in the amount expressed in monetary units in the national currency of Ukraine. If the debtor’s obligations are expressed in a foreign currency, the composition and the amount of such claims must be determined in the national currency at the rate of the National Bank of Ukraine, set for the date of submission of a petition with claims to the debtor by the creditor.
A voluntary settlement agreement on restructuring or financial rehabilitation entered into by and between the creditors participating in such a procedure is subject to approval by the economic court, which is obliged to hear every creditor present at the meeting who has objections to the conclusion of the voluntary settlement agreement even if the corresponding creditor has previously voted for the conclusion of such agreement. In case of default under the voluntary settlement agreement, creditors can file their claims against the debtor to the extent provided by this settlement agreement.
As non-debtor parties in the bankruptcy proceedings, creditors are released from the obligations stipulated by the voluntary settlement agreement in a case of violation of the terms of the voluntary settlement agreement.
Repayment of creditor claims by offsetting homogeneous counterclaims is carried out with the consent of the creditor in cases where this does not violate the property rights of other creditors.
The restructuring plan or agreement may be terminated by the court if the debtor does not comply with the terms of this agreement regarding the repayment of the third part of the recognised claims in the framework of this bankruptcy proceeding.
In Ukraine, there are no legislative norms to preserve any ownership of existing shareholders within the scope of restructuring proceedings.
The current legislation provides for the initiation of bankruptcy proceedings upon submission of the corresponding petition by either the debtor or the creditor.
The economic court will issue a ruling on acceptance of the petition for consideration and shall arrange a preparatory meeting in which the applicant’s claims, as well as the existence of grounds for initiation of a bankruptcy proceeding, are examined.
The court will issue a ruling on the initiation of proceedings with:
In order to identify all the creditors who intend to participate in the proceedings, an announcement of the initiation of the proceedings will be published on the official website of the Supreme Economic Court of Ukraine.
The sale of the bankrupt party’s property is carried out by a court-appointed administrator after carrying out an inventory and valuation of the property. The method of selling the asset (via an auction or a direct sale to a legal entity or a private individual) is selected by the court-appointed administrator. The terms of contracts concluded for the sale of the bankrupt party’s property must not provide for instalments or deferred payments for the acquired property. The ownership right to the property sold within the scope of bankruptcy proceedings is acquired by the buyer (the winning bidder at an auction) after performance of all obligations stipulated by the contract and the law.
The consequences for the failure of the parties to comply with the provisions of a voluntary settlement agreement are given in 6.15 Failure to Observe the Terms of Agreements.
The current legislation provides that where investors are present, the financial rehabilitation manager must develop a financial rehabilitation plan for their participation. The investor is vested with the right to participate in the discussion of the debtor’s financial rehabilitation plan and to participate in court hearings during the financial rehabilitation process, etc.
There are no legislative requirements in Ukraine regarding any insolvency proceedings that can be used to liquidate a corporate group.
Only bankruptcy creditors recognised by the economic court, whose claims have been entered in the register of creditors’ claims, may participate in creditor meetings. The number of votes held by bankruptcy creditors is proportional to the amount of their recognised claims and is a multiple of one thousand hryvnias (excluding court fees, forfeits, fines, penalties and other financial sanctions). The first meeting will be held in the presence of creditors who have at least two thirds of the total number of votes; the following meetings are held in the presence of creditors who have the simple majority of votes.
For the duration of the bankruptcy proceedings, the meeting of creditors will elect a committee of creditors, which must not have more than seven members. Creditors who have 25% or more of the votes are automatically included in the committee of creditors. During bankruptcy proceedings, the interests of all the creditors are represented by the committee of creditors.
From the date of introduction of a property disposal procedure and the appointment of a court-appointed administrator as the debtor’s asset manager, measures must be adopted with the aim of controlling and supervising the management and disposing of the debtor's property in order to ensure the preservation and efficient use of the debtor’s property assets etc.
In the course of the financial rehabilitation procedure, the management of the debtor will be transferred to the financial rehabilitation manager, and the powers of the debtor’s management bodies regarding the management and disposal of the debtor’s property will be terminated.
In the process of liquidation of the debtor, the liquidator exercises the authority to sell the property of the bankrupt party in order to satisfy the claims entered in the register of creditors.
Bankruptcy proceedings related to foreign proceedings are applied on a reciprocity basis. Reciprocity is considered to exist if the possibility of co-operation between a foreign state and Ukraine is provided for by an international treaty of Ukraine accepted as binding by the Verkhovna Rada (Supreme Court) of Ukraine.
In the case of cross-border co-operation, the economic court will render judicial assistance, provided that the foreign bankruptcy proceedings and the bankruptcy proceedings opened in accordance with the current legislation of Ukraine are interconnected.
Bankruptcy proceedings are regulated by applicable provisions of the Bankruptcy Procedures Code of Ukraine as well as international treaties of Ukraine accepted as binding by the Verkhovna Rada of Ukraine.
The enforcement of the decisions of foreign courts in bankruptcy cases in Ukraine is determined by international treaties of Ukraine accepted as binding by the Verkhovna Rada of Ukraine.
Bankruptcy proceedings relating to foreign proceedings are applied on a reciprocity basis. The implementation of this principle is provided for by an international treaty of Ukraine accepted as binding by the Verkhovna Rada of Ukraine.
When deciding on the provision of judicial assistance, or the refusal to provide the same, or the termination of provision of the same, the economic court must make sure that property rights and other rights of creditors and other interested parties, including the debtor, are not violated.
The economic court will refuse to apply international aspects of bankruptcy if the application of such aspects is contrary to public policy, sovereignty, and the basic principles of the current legislation of Ukraine.
The current legislation of Ukraine determines that foreign persons have the same procedural rights and duties as citizens of Ukraine and legal entities established under the current legislation of Ukraine, except as required by the law or an international treaty accepted as binding by the Verkhovna Rada of Ukraine.
Within the scope of bankruptcy proceedings, an asset manager is appointed during the debtor’s property disposal stage; a financial rehabilitation manager is appointed during the debtor's financial rehabilitation stage; a liquidator is appointed during the debtor's liquidation stage. An administrator is appointed by the economic court from among those who have received the relevant certificate and have been entered in the Unified Register of Court-Appointed Administrators of Ukraine.
Applicable provisions of the current legislation of Ukraine define the rights and obligations of a court-appointed administrator, who, in particular, enjoys all the rights of an asset manager, a financial rehabilitation director, and a liquidator. The court-appointed administrator is obliged to strictly observe the requirements of the current legislation; to adopt measures aimed at protecting the debtor's property; to analyse the financial, economic, investment and other activities of the debtor etc. The court-appointed administrator is independent in the exercise of this authority.
On 20 November 2019, the Bankruptcy Trustees Congress took place, uniting 500 bankruptcy trustees from all over Ukraine. At the Bankruptcy Trustees Congress of Ukraine:
The activities of the UNITA are aimed at regulating and monitoring the activities of bankruptcy trustees of Ukraine in business bankruptcy proceedings and the creation of the UNITA took place with the active assistance of the EU Project “PRAVO-Justice”.
An official representative in the process of cross-border co-operation is a court-appointed arbitration manager who must be a citizen of Ukraine and who is certified as a court-appointed arbitrator. At enterprises carrying out activities related to state secrets, the court-appointed arbitration manager will have access to state secrets. Court-appointed arbitration managers are independent professionals.
The appointment and replacement of a court-appointed arbitration manager is carried out by the economic court.
The court-appointed arbitration manager may have an assistant, on the basis of an employment contract, who is a citizen of Ukraine and meets the requirements of the Bankruptcy Procedures Code of Ukraine.
The recruitment of the above assistant is carried out by the court-appointed arbitration manager. Rights, obligations, responsibility and remuneration terms are defined in the employment contract entered into by and between the court-appointed arbitration manager and the assistant.
The selection and recruitment of an assistant is the exclusive right of the court-appointed arbitration manager, who, in turn, is obliged to verify the compliance of the person being hired as an assistant with the applicable requirements of the current legislation on bankruptcy.
The assistant helps the court-appointed arbitration manager during the implementation of measures aimed at restoring the debtor's solvency or at declaring the debtor bankrupt, and also carries out the instructions of the court-appointed arbitration manager to ensure that the latter’s wishes are enacted. The assistant to the court-appointed arbitrator is responsible to the court-appointed arbitration manager .
The current legislation of Ukraine regarding the restoration of a debtor’s solvency or declaring the debtor bankrupt does not provide for alternative dispute resolution procedures involving a mediator (mediation procedures).
The current legislation of Ukraine provides for the mandatory participation of a court-appointed arbitration manager in the bankruptcy proceedings from the moment of the initiation of the proceedings by the economic court. The same person is vested with the right to exercise the powers of a court-appointed arbitration manager at all stages of the bankruptcy proceedings.
The arbitration manager is neither a mediator nor an arbitrator.
The current legislation of Ukraine on the restoration of the solvency of a debtor or the recognition of the debtor as bankrupt does not provide for a preliminary insolvency agreement for arbitration.
The state bankruptcy body establishes the requirements for obtaining a certificate to be a court-appointed administrator. This body also controls the Unified Register of Court-Appointed Administrators of Ukraine, and establishes the procedure by which court-appointed administrators submit statements.
The right to carry out the activities of a court-appointed administrator is granted to a person who has received a certificate in accordance with the procedure determined by the law and who has been entered in the Unified Register of Court-Appointed Administrators of Ukraine.
Where there are signs of bankruptcy, the director of an enterprise is obliged to send information about this to the founders of the enterprise (participants, shareholders). If a general meeting of the founders determines signs of a threat to the solvency of the enterprise, the founders may oblige the director to file a petition with the economic court seeking the initiation of bankruptcy proceedings.
If the director of the debtor interferes with the performance of the powers of the asset manager, or if the director of the debtor performs actions that violate the rights and legitimate interests of the debtor or its creditors, the economic court has the right to dismiss the director of the debtor from the director's occupied position upon reasoned petition by the participants in the bankruptcy proceedings.
The consequence of the recognition by the court of fiduciary claims is a violation of the rights of other creditors in the framework of a bankruptcy case, whose claims are not financial, in terms of the volume of satisfaction of claims.
The current legislation on bankruptcy determines that the authority to appoint court-appointed administrators belongs exclusively to the economic court.
The current legislation on the restoration of a debtor’s solvency or declaration of the debtor's bankruptcy does not provide for the shadow performance of the duties of a member of the board of directors.
In the event of the debtor’s bankruptcy through the fault of its founders (participants, shareholders) or other persons (including the director of the debtor) who are entitled to give binding instructions to the debtor or have the ability to otherwise determine its actions, participants/shareholders of the debtor (or such other persons as listed above) may incur subsidiary liability for the debtor’s obligations in a case where the debtor’s property is insufficient.
The current legislation of Ukraine on bankruptcy provides grounds for the economic court to invalidate a transaction (a contract) or property actions of the debtor, in particular if the debtor has alienated the property free of charge, has assumed obligations without any other property actions, or has refused its own property claims; if the debtor assumed obligations before the bankruptcy proceedings were initiated, which resulted in the insolvency of the debtor or the impossibility for the debtor to perform its monetary obligations to other creditors; if the debtor has alienated or acquired property at prices lower/higher than market prices.
In accordance with applicable requirements of the current legislation of Ukraine on bankruptcy, transactions (contracts) or property actions of the debtor carried out by the debtor after the initiation of the bankruptcy proceedings, or within one year preceding the initiation of the bankruptcy proceedings, may be accordingly invalidated or refuted by the economic court within the framework of the bankruptcy case upon a corresponding petition filed by the court-appointed administrator or a bankruptcy creditor.
The court-appointed administrator and bankruptcy creditors have the right to initiate the invalidation of a transaction (contract) or property actions of the debtor in the economic court during all stages of the bankruptcy proceedings.
An independent valuation of the property and the property rights of the debtor, in respect of which the bankruptcy proceedings are initiated, is carried out exclusively by the valuers in accordance with the current legislation of Ukraine on the valuation of property, property rights and professional valuation activities. An independent valuation is mandatory for the sale of the debtor’s assets within the scope of bankruptcy proceedings.
The initiators of an independent valuation of the property and the property rights of the debtor in respect of which the bankruptcy proceedings are initiated are the court-appointed administrator and the creditors.
Independent property valuation procedures are established by applicable provisions of the current laws and regulations on property valuation. As a result of the valuation, a property valuation report is compiled, which must contain a conclusion on the value of the property.
The institution of valuation activities in Ukraine provides for state regulation of valuation activities, which consists of ensuring the formation and development of the property valuation infrastructure, the objectivity and legality of its implementation, the implementation of international property valuation standards and rules, etc.
The state authority implementing state regulation of valuation activities in Ukraine is the State Property Fund of Ukraine.