GOLAW attorneys successfully defended a foreign bank in the Supreme Court, forming a judicial practice on bankruptcy of debtors with assets on the temporarily occupied territories

With the support of GOLAW’s team of attorneys, the bank filed a petition with the court to initiate bankruptcy proceedings against the company that owned the largest titanium dioxide plant in Eastern Europe. The plant was located in the Autonomous Republic of Crimea and has been under occupation since the annexation of Crimea in 2014. In 2021, the debtor alienated its main asset to a russian business and failed to fulfill its obligations to creditors, including a German bank.

At the same time, the Bankruptcy Code of Ukraine recently introduced a prohibition on the opening of bankruptcy proceeding against companies whose property complexes are located on the temporarily occupied territories of Ukraine or if a debtor’s insolvency arose due to aggression against Ukraine. 

The debtor argued both the existence of an integral property complex in the occupied territories of Ukraine and its own insolvency as a result of armed aggression (despite the sale of the plant to the russian business).

The Supreme Court agreed with the arguments of GOLAW team and upheld the decisions of the lower courts to open bankruptcy proceedings. 

The resolution adopted by the court became the important precedent in which the court clarified that the prohibition on initiating bankruptcy proceedings under clauses 1-6 of the Final and Transitional Provisions of the CUEPB applies to those legal relations and cases that existed before the relevant provision came into force on 29.07.2023, but not earlier than 24.02.2022.

These conclusions of the Supreme Court will significantly impact future court practice in bankruptcy cases of debtors affected by the aggression of the russian federation and will significantly complicate possible procedural abuses. 

Reference to the resolution of the Supreme Court of 29.08.2024:  https://reyestr.court.gov.ua/Review/121293225 

The project was handled by a team of GOLAW’s litigation attorneys: partner and head of practice Kateryna Manoylenko, partner Kateryna Tsvetkova and associate Ihor Selivakin.