Bankruptcy of a Legal Entity

Bankruptcy of a legal entity is a court procedure applied when a company is unable to meet its monetary obligations to creditors or when there is a real threat of insolvency.

For business owners, bankruptcy may serve as a tool for managing a difficult financial situation, protecting assets from chaotic enforcement actions, and seeking options to restore solvency. For creditors, it is a legal mechanism to influence the debtor, identify assets, challenge suspicious transactions, and satisfy claims within a single court-supervised procedure.

VINCO’S Legal Company provides legal support in bankruptcy proceedings involving legal entities for debtors, creditors, business owners, and investors. We analyze the company’s financial and legal position, prepare documents, represent the client before the commercial court, and support the case at every stage.

Bankruptcy may be relevant both for the debtor company and for its creditors. It should be considered when:

• the company systematically fails to fulfil monetary obligations to creditors;
• there is a risk of account freezes, enforcement actions, or loss of assets;
• it is necessary to stop fragmented enforcement and move the dispute into a controlled court procedure;
• a creditor wants to verify the debtor’s actual financial condition and use the tools available in bankruptcy proceedings;
• the company has significant accounts payable that cannot be repaid in the ordinary course of business;
• the owners are considering restructuring, rehabilitation, or termination of business through liquidation;
• there are signs of asset stripping, fictitious agreements, or transfer of assets to related parties.

Bankruptcy proceedings against a legal entity may be opened upon an application filed by the debtor or a creditor. In cases established by law, applications regarding specific categories of debtors may also be filed by authorized state bodies.

The debtor may apply to the court if the company is insolvent or there is a threat of insolvency. A creditor may initiate the case if the debtor fails to fulfil monetary obligations within the prescribed term.

Bankruptcy cases involving legal entities are considered by the commercial court at the debtor’s registered location.

The following court procedures may apply to a debtor that is a legal entity:

• asset administration of the debtor;
• rehabilitation of the debtor;
• liquidation of the bankrupt entity.

Ukrainian legislation also provides for preventive restructuring, which may be used by a legal entity before bankruptcy proceedings are opened if the business still has a chance to prevent insolvency.

Asset administration is the first key procedure after the opening of a bankruptcy case. Its purpose is to preserve the debtor’s assets, control management and disposal of property, analyze the financial condition of the company, and determine the next stage: rehabilitation, liquidation, or closure of proceedings.

At this stage, an insolvency officer is appointed, the register of creditors’ claims is formed, and the debtor’s assets, liabilities, agreements, and potentially risky transactions are reviewed.

Rehabilitation is a procedure aimed at restoring the company’s solvency. It may include debt restructuring, sale of certain assets, attracting an investor, changing the management model, deferral or instalment payment arrangements, partial debt forgiveness, or other measures approved by creditors and the court.

Rehabilitation is appropriate when the business has economic potential to continue operations and liquidation is not the best scenario for either the debtor or creditors.

Liquidation is applied when solvency cannot be restored or creditors do not support the rehabilitation plan. After the company is declared bankrupt, the court opens liquidation proceedings. The liquidator forms the liquidation estate, identifies assets, sells property, and uses the proceeds to satisfy creditors’ claims in the order established by law.

After the liquidation procedure is completed, the legal entity is terminated and the relevant record is entered in the state register.

• centralization of all creditors’ claims within one court procedure;
• protection from chaotic enforcement and individual collection actions;
• the possibility to propose a rehabilitation plan or debt restructuring;
• a legal mechanism for controlled termination of the company;
• reduced risk of uncontrolled accumulation of debt and disputes;
• protection from informal pressure by individual creditors.

• the ability to file monetary claims against the debtor within court proceedings;
• participation in creditors’ meetings and the creditors’ committee;
• control over the actions of the insolvency officer;
• influence on the choice of the next procedure: rehabilitation or liquidation;
• access to information about the debtor’s assets, liabilities, and financial position;
• the ability to challenge suspicious transactions of the debtor;
• the possibility to raise the issue of liability of directors or owners in cases established by law.

The list of documents depends on whether the application is filed by the debtor, a creditor, or another authorized person. For preliminary analysis, the following documents are usually required:

• constitutional documents of the legal entity;
• current extract from the state register;
• financial statements and balance sheet;
• documents confirming the existence of debt;
• agreements, acts, invoices, and primary documents;
• court decisions and enforcement documents, if any;
• information on assets, bank accounts, property, and receivables;
• information on creditors and debtors of the company;
• documents relating to pledged or mortgaged property;
• information about the director, participants, related parties, and significant transactions.

Official costs depend on who files the application, what claims are submitted, whether the insolvency officer’s remuneration must be advanced, and what additional procedural actions are required.

As of 2026, the court fee for a creditor’s application to open bankruptcy proceedings is 10 subsistence minimums for able-bodied persons, which equals UAH 33,280.

In addition, the applicant must provide proof of advance payment of the insolvency officer’s remuneration in the amount of three minimum monthly wages for three months of performance. Based on 2026 indicators, the minimum estimated advance payment is UAH 77,823.

The final case budget is determined individually after reviewing the documents, amount of debt, number of creditors, assets of the debtor, and the selected strategy.

• errors in the application or an incomplete set of documents may result in the application being left without movement or returned;
• suspicious transactions of the debtor may be challenged within the bankruptcy case;
• directors and owners may face the risk of joint or subsidiary liability in cases established by law;
• without proper financial analysis, the procedure may move to liquidation instead of rehabilitation;
• a creditor who misses the deadline for filing claims may lose important influence over the procedure;
• pledged property, tax debts, enforcement proceedings, or corporate conflicts may significantly complicate the case.

1. Initial consultation and determination of the client’s objective: debt recovery, debtor protection, rehabilitation, or liquidation.
2. Analysis of documents, financial condition, debts, assets, court disputes, and enforcement proceedings.
3. Selection of the strategy: filing an application, preparing for rehabilitation, preventive restructuring, working with creditors, or defending against an unfounded application.
4. Preparation of the application, evidence, calculations, annexes, and procedural documents.
5. Filing documents with the commercial court and representing the client’s interests.
6. Support during asset administration and participation in the review of creditors’ claims.
7. Work with creditors’ meetings, the creditors’ committee, and the insolvency officer.
8. Support during rehabilitation or liquidation proceedings.
9. Challenging suspicious transactions, asset protection, or representation of the creditor.
10. Completion of the procedure and obtaining the final court result.

• assess the prospects of opening a bankruptcy case;
• prepare the legal position of the debtor or creditor;
• develop a strategy for asset protection or debt recovery;
• prepare the application to the commercial court and necessary evidence;
• support the procedure at every stage;
• represent the client in court, at creditors’ meetings, and in communication with the insolvency officer;
• analyze risks of subsidiary liability and transaction challenges;
• help choose between rehabilitation, liquidation, or preventive restructuring.

Bankruptcy of a legal entity is a complex court procedure that requires not only legal knowledge but also an understanding of the business, financial model, assets, debts, and real interests of the parties. The VINCO’S team will help develop the right strategy and support the procedure in line with the client’s interests.