Times of financial and political instability & bankruptcy practice developments in 2025

I.Legislative changes in 2025

The concept of ‘stakeholder status’

The key development in insolvency practice in 2025 was the introduction of the concept of ‘interested parties’. Under the amended version of the Insolvency Proceedings Code, insolvency creditors recognised as having an interest in relation to the debtor are deprived of their casting vote at creditors’ meetings (or creditors’ committee). The aim of legislators is clear – to limit the influence of ‘friendly’ creditors on the course of bankruptcy proceedings and to prevent abuse through the artificial creation of a majority amongst creditors.

These changes are made particularly significant by their retrospective effect, as the courts have begun to apply the new provisions to bankruptcy cases where proceedings were initiated before the law came into force. This means that in a significant number of existing cases, the balance of power within the creditors’ committee has changed radically: creditors who previously had a decisive influence on decision-making have lost their voting rights, whilst genuinely independent creditors have gained the ability to influence the proceedings.

The consequences have been far-reaching. Since the implementation of these provisions, self-interest has become the primary and determining factor in devising a strategy for any bankruptcy case – for both creditors and debtors. Assessing a creditor for signs of self-interest has become a mandatory element of legal analysis even before any procedural documents are filed.

Changes regarding the moratorium and the rights of secured creditors

The legislative changes adopted in 2025 have significantly simplified the position of secured creditors in bankruptcy proceedings. To understand the scale of these changes, we need to look at the background to the issue.

Ever since the adoption of the Bankruptcy Proceedings Code of Ukraine in 2019, the so-called ‘170-day rule’ has been in place – a provision under which the moratorium on the enforcement of security over collateral automatically expires if the property disposal procedure lasts for more than 170 days without the opening of liquidation or reorganisation proceedings. The rule itself was progressive, but from the very first days of its application, a heated debate flared up among practitioners: does a secured creditor have the right, upon the expiry of this period, to enforce the security independently, or is a corresponding court order required for this?

The Supreme Court of Ukraine put an end to this debate by stating that a court order is mandatory for the enforcement of the security. However, this ruling gave rise to a new problem: obtaining what appeared, at first glance, to be a formal procedural document often turned, in practice, into a protracted legal battle, thereby significantly undermining the very concept of the 170-day period for secured creditors.

Legislative amendments in 2025 closed this loophole by expressly providing for the right of a secured creditor to realise the collateral upon expiry of the prescribed period without the need to obtain a court order. This decision significantly enhances the effectiveness of the protection of secured creditors’ rights and brings Ukrainian legislation closer to standards that ensure real, rather than merely declaratory, protection of security rights.

Changes to the auction procedure

The most significant change from a practical point of view is the provision that the existence of a seizure order on the debtor’s property does not constitute grounds for suspending, cancelling or otherwise interrupting an auction. The imposition of a seizure order has traditionally been one of the most common tools for ‘derailing’ auctions – a simple and effective way to block the sale of property for an indefinite period. On paper, the new rules significantly restrict this practice. However, the solution to the problem is only partial – legislators have overlooked seizures imposed in the context of criminal proceedings. It is precisely this tool that is a sort of ‘Harry Potter’ of Ukrainian jurisprudence: thanks to the rather creative wording of the relevant court orders, it can continue to be used effectively to block auctions despite all the legislative changes.

Equally important is the change regarding the determination of the winning bidder. Previously, if the winner refused to pay, the auction was automatically deemed to have failed, and the insolvency administrator was forced to start the entire procedure from scratch. Now, the system automatically designates the participant with the next highest bid as the winner, making the procedure more logical and resistant to manipulation.

Other important changes include an increase in the security deposit for a repeat auction from 10 per cent to 20 per cent, and the legislative establishment of clear grounds for deeming a winner to have declined to purchase the property.

Preventive restructuring procedure

The most eagerly anticipated innovation, introduced in 2024 and brought into force on 1 January, 2025, was the preventive restructuring procedure. This mechanism, designed to serve as an effective tool for the pre-litigation resolution of debtors’ financial difficulties, has attracted considerable interest among practitioners. However, the first year of its application proved to be more modest than expected – most cases are either still pending or have been concluded without achieving a result. A telling example in this context is the case of the Gulliver Shopping Centre – the first attempt to apply the new mechanism, which ended in failure and the opening of bankruptcy proceedings. In the case of the Kharkiv Tractor Plant, the court approved a preventive restructuring plan; however, this case cannot be regarded as a representative example of the successful application of this legal mechanism, as the decision has not been reviewed by the courts of appeal and cassation.

II. Developments in case law in 2025

Claims by a former shareholder of the debtor do not constitute creditor claims
(order of 18 December, 2025 in case No. 902/25/24)

The Supreme Court confirmed that a claim by a former shareholder for payment of their share in the debtor’s authorised capital does not constitute a creditor’s claim in bankruptcy proceedings. By its nature, this is a corporate property claim, which can only be satisfied from the assets remaining after the claims of all creditors have been fully satisfied.

The debtor’s withdrawal of the claim is not unconditional
(order of 4 December 2025 in Case No. 902/560/20)

The court cannot automatically accept the debtor’s withdrawal of the claim – it is obliged to assess its impact on the rights and interests of creditors. A formal check of the debtor’s director’s powers is insufficient; the court must satisfy itself that there has been no abuse of procedural rights and that the balance of interests of all parties to the case has been maintained.

The limits of the asset administrator’s powers
(order of 16 April, 2025 in case No. 916/3630/23)

The Supreme Court has restricted the powers of the asset administrator, noting that bringing claims to recover debts from the debtor’s counterparties constitutes interference in the debtor’s day-to-day business operations. Provided that the debtor’s director retains his powers, this right belongs to him specifically, and not to the asset administrator.

Creditor’s Interest and Fraudulent Transactions
(Ruling of 11 November, 2025 in Case No. 917/2142/24)

The Supreme Court has clarified the scope of application of the concept of ‘creditor’s interest’ in the context of fraudulent transactions. A creditor is not deemed to have a conflict of interest in relation to the debtor if the transaction on the basis of which the creditor’s claims arose is recognised as a fraudulent transaction in the creditor’s own bankruptcy proceedings – that is, as having been carried out to the detriment of the interests of that creditor and its creditors.

Social media as evidence of the debtor’s bad faith
(order of 23 September, 2025 in case No. 916/105/22)

In a high-profile case regarding the insolvency of a natural person, the Supreme Court confirmed that the debtor’s Instagram posts may constitute admissible evidence of concealment of their true financial circumstances. Holiday photographs and lifestyle posts, together with other evidence contradicting the declared financial circumstances, constitute grounds for closing insolvency proceedings.

III. High-profile bankruptcies of 2025

Gulliver Shopping Centre

The case surrounding the Gulliver Shopping Centre went down in history as Ukraine’s first attempt to implement a preventive restructuring procedure. The procedure was initiated by the debtor itself – Tri O LLC – but from an outside observer’s perspective, it appeared to be a means of preventing creditor banks from enforcing their claims against the property. The procedure ended in failure, after which Oschadbank and Ukreximbank enforced the mortgage and initiated bankruptcy proceedings against the former owner of Gulliver.

Galichpharm JSC and Kyivmedpreparat PJSC

Legal disputes between the insolvent Finance and Credit bank and the pharmaceutical companies Galichpharm JSC and Kyivmedpreparat PJSC dragged on for years. In 2025, the state-run Deposit Guarantee Fund sold its claims against these companies. The new creditor – Skydevelopment Ltd – began actively pursuing debt recovery, notably by initiating bankruptcy proceedings against both companies.

Poltava Mining and Processing Plant PJSC

Poltava Mining and Processing Plant is Ukraine’s largest exporter of iron ore pellets to Europe and forms part of Konstantin Zhevago’s Ferrexpo Group. The issues surrounding this case stem from the same insolvent bank, Finance and Credit – the claim against the Poltava Mining and Processing Plant in the amount of 4.7 billion UAH was acquired by Maxi Capital Group LLC, which initiated bankruptcy proceedings against the company in May 2025. On 24 February, 2026, the Commercial Court of Poltava Region opened bankruptcy proceedings against PMPP, causing Ferrexpo’s shares on the London Stock Exchange to plummet by 28 per cent. It is telling that the court opened proceedings without a final ruling from the Supreme Court, which had previously suspended the potential enforcement of the disputed claim. In parallel with the bankruptcy proceedings, a legal dispute is ongoing with regard to recovery of the same sum, which is still being considered by the Supreme Court.

Kharkiv Tractor Plant JSC

The Kharkiv Tractor Plant is one of Ukraine’s oldest industrial enterprises. Founded in 1931, it specialized in the manufacture of tractors and other agricultural machinery. In July 2025, the Commercial Court of Kharkiv Region initiated preventive restructuring proceedings (Case No. 922/2471/25), and in December 2025 it approved a debt restructuring plan totalling over 1 billion UAH, with repayment deferred until March 2029.