Bankruptcy trends evident in 2025 are shaped by a combination of new legislation and wartime challenges.
1. Focus on Debtor Support
A major development has been the introduction, as of January 1, 2025, of a preventive restructuring procedure in line with EU Directive 2019/1023 (Law No. 3985-IX). This procedure gives the debtor six months to negotiate a plan with creditors and thereby avoid the opening of formal bankruptcy proceedings. If no compromise is reached, the preventive restructuring procedure is terminated.
Initial results have been mixed. For example, the high-profile restructuring of Tri O LLC, with debts exceeding USD 400 million, ended without success. In that instance, the debtor proposed to transfer a 151,000-square-meter business center in Kyiv to the banks with leaseback rights, but the creditors opted for foreclosure instead.
Enterprises with assets located in temporarily occupied regions of Ukraine remain a particular challenge. Lack of access prevents the inventory or sale of such assets. Since 2023, the code has allowed courts to deny bankruptcy proceedings if the debtor demonstrates that non-performance of obligations was caused by the war. In 2025, the Supreme Court additionally confirmed that existing proceedings may also be closed on this basis. However, judicial practice remains inconsistent, as the assessment of the causal link between insolvency and the war depends on the individual court.
2. Impact of Sanctions
Sanctions imposed on persons connected with the Russian Federation have become an instrument of state protection, yet they have also created conflicts for bankruptcy procedures. Where the debtor’s owners are subject to the blocking or seizure of assets, the question arises of whether such property can be sold in bankruptcy to satisfy creditor claims. Some experts argue that after liquidation is opened and the link with the sanctioned owner is severed, the property may be sold. However, court practice has not yet confirmed this, leaving creditors exposed.
If the sanctioned party is a creditor, existing moratoria prevent satisfaction of its claims, while recent legislative amendments deprive it of voting rights in the creditors’ committee. No systemic legislative solution has been adopted regarding the ultimate treatment of such claims. Divergent approaches increase risks of abuse and highlight the need for clearer regulation.
3. Strengthening Creditor Protection
Another current trend is the recovery of damages from the owners and management of bankrupt entities. Mechanisms and institutions are now in place to enable the return of diverted assets and the recovery of losses directly from shareholders and management.
In 2024, Ukraine’s Supreme Court ruled that the amount of damages due equals the outstanding creditor claims after asset sales. Judicial practice has also entrenched the “piercing the corporate veil” approach, which allows damages to be recovered from ultimate beneficial owners or related parties even without a direct legal link. Liability may arise for failure to timely initiate bankruptcy proceedings, with any recovered amounts directed to the liquidation estate rather than to individual creditors. However, if the debtor has initiated preventive restructuring, such liability may be excluded.
Since 2025, the practice of so-called “technical” bankruptcies, where proceedings were controlled by related creditors, has been significantly curtailed. Legislation has expanded the definition of “interested parties,” while courts may deprive them of decisive voting rights in the creditors’ committee. This is expected to reduce the risk of manipulation.
Conclusion
Ukraine continues to implement European approaches in the field of bankruptcy while simultaneously adapting them to wartime realities. For legislators, the key task is to maintain a balance of interests and promptly address legal conflicts. For businesses, priorities remain internal control systems, early detection of financial distress, and monitoring of counterparties. These are all tools essential for minimizing risks in a turbulent economy.
Olena Volianska, Partner, Head of Bankruptcy and Restructuring exclusively for CEE Legal Matters.
