How do the NBU’s currency restrictions influence the initiation of bankruptcy proceedings in Ukraine?

NBU Resolution No. 18 of 24 February 2022 “On the operation of the banking system during the period of martial law” (hereinafter – Resolution No. 18, NBU Resolution No. 18) introduced temporary currency restrictions. Most cross-border transfers of currency values were prohibited, except in cases expressly permitted by this resolution. Such restrictions make it almost impossible to conduct currency settlements between Ukrainian debtors and foreign creditors.  

This raises the question of whether the NBU’s currency restrictions, which objectively complicate the fulfillment of currency obligations, can affect the initiation of bankruptcy proceedings, in particular, and become a reason for initiating proceedings. This is the question we will consider further in this article. 

Legal regulation of the initiation of bankruptcy proceedings 

The conditions and procedure for initiating bankruptcy proceedings are established by the Bankruptcy Code of Ukraine (hereinafter referred to as the BCU, Code).  

According to Part 1 of Article 39 of the BCU, the commercial court shall verify the validity of the applicant’s claims and determine whether there are grounds for initiating bankruptcy proceedings at a preparatory hearing held in accordance with the procedure provided for by this Code.  

In turn, the ruling of the Commercial Court of Cassation within the Supreme Court (hereinafter referred to as the CCC SC) dated 20 March 2024 in case No. 911/1005/23 emphasises that, taking into account the analysis of the content of Articles 1, 8, 34, and 39 of the BCU, the legal grounds for opening bankruptcy proceedings are as follows.  

• The existence of a monetary obligation of the debtor to the creditor, the term of which expired on the date of the creditor’s application to the court;  
• The absence of a dispute between the creditor and the debtor regarding the right to the stated claims;  
• Prior to the preparatory court hearing, the claims of the creditor (creditors) have not been satisfied in full by the debtor. 

At the same time, the panel of judges emphasises that the purpose of the preparatory hearing of the commercial court in considering an application to open bankruptcy proceedings is as follows. 

• Verification of the validity of the applicant’s (applicants’) claims in terms of their compliance with the concept of the debtor’s ‘monetary obligation’ to the initiating creditor;  
• Establishing the existence of a legal dispute; 
• Establishing the possibility of satisfying such claims before the preparatory hearing in the case. 

Thus, bankruptcy proceedings are initiated on the basis of the debtor’s overdue monetary obligation, the absence of a legal dispute regarding this obligation, and the creditor’s claims not being satisfied before the preparatory court hearing. 

In accordance with Part 6 of Article 30 of the BCU, the Commercial Court shall refuse to open proceedings in a case if: 

• The creditor’s claims indicate the existence of a dispute over a right that is subject to resolution in civil proceedings; 
• The creditor’s (creditors’) claims have been satisfied in full by the debtor prior to the preparatory court hearing; 
• An application has been filed for the initiation of bankruptcy proceedings against a wholesale electricity supplier. 

As we can see, the list of grounds for refusing to open proceedings is exhaustive, i.e. the court cannot refuse to open proceedings for other reasons not expressly provided for in the Code (at the same time, the Code of Ukraine on Insolvency Proceedings, in particular the Transitional Provisions, contains certain additional grounds for refusing to open proceedings, but they relate to specific circumstances associated with martial law. The currency restrictions imposed by the NBU do not fall within these grounds and therefore cannot serve as a basis for refusing to open proceedings.  

When deciding whether to open bankruptcy proceedings, the commercial court acts within the powers clearly defined by law. The BCU does not give the court discretion to interpret or expand the list of grounds for refusing to open proceedings. Therefore, any references by the debtor to external circumstances that allegedly made it impossible to fulfil its obligations (in particular, currency restrictions) cannot be used by the court to refuse to open proceedings if such grounds are not expressly provided for in the BCU. 

When considering an application to open proceedings, the court assesses not the debtor’s economic capacity, but the legal facts, in particular the existence of a monetary obligation whose term has expired, the absence of a dispute over the right, and the creditor’s failure to satisfy the claims prior to the preparatory hearing. These criteria are decisive for opening bankruptcy proceedings. 

Regarding the debtor’s inability to fulfil its monetary obligations under currency restrictions

As mentioned above, NBU Resolution No. 18 introduced temporary restrictions on currency transactions, in particular, a ban on cross-border transfers of currency values outside Ukraine.  

These restrictions may indeed complicate or make it impossible for the debtor to repay its obligations to non-residents through currency settlements in a timely manner. However, from the point of view of bankruptcy law, such circumstances do not constitute grounds for automatic refusal to open bankruptcy proceedings. 

According to the BCU, the key criteria for opening proceedings remain: 

• The existence of an overdue monetary obligation; 
• The absence of a dispute over the right to the claimed obligation; 
• The creditor’s failure to satisfy the requirements for a preliminary court hearing.  

Thus, even in the event of a temporary inability to fulfil obligations due to currency restrictions, the court assesses only the formal criteria of bankruptcy law. The debtor’s reference to NBU restrictions may be taken into account only at the stage of further debt settlement or reorganisation, but it is not a ground for refusing to open proceedings. 

The BCU does not explicitly link the ability to fulfil obligations to currency regulation; what is important is the fact that the debtor has failed to fulfil their monetary obligations within the established time frame, regardless of the reasons for this. 

As of now, currency restrictions have been somewhat relaxed. In particular, repayment of the principal debt is allowed on a monthly basis, in an amount not exceeding 10% of the principal debt, which allows debtors to make scheduled payments even in foreign currency.  

An analysis of existing case law confirms that temporary restrictions on foreign currency transactions do not prevent bankruptcy proceedings from being initiated. In particular, the Commercial Court of Kyiv, in its ruling of 1 May 2025 in case No. 910/11247/23, continued the liquidation procedure due to the restrictions on cross-border payments and the foreign creditor’s lack of a Ukrainian bank account.  

Therefore, it can be concluded that temporary restrictions on cross-border payments should not be an obstacle to the initiation of bankruptcy proceedings, since the key factors for the court remain the overdue obligation and the absence of a dispute over the right. 

Conclusions

The currency restrictions imposed by the NBU during martial law do not change the essence of the obligation and do not exempt the debtor from liability for its non-fulfilment.  

The list of grounds for refusing to open bankruptcy proceedings is exhaustive and cannot be expanded; therefore, the NBU restrictions do not affect the fact of opening the case.  

Thus, currency restrictions may explain the reason for insolvency, but they do not eliminate the fact of non-performance of a monetary obligation and are not a procedural obstacle to the opening of bankruptcy proceedings.