An Individual’s Insolvency: What Documents Are Required to Open Proceedings

Individual insolvency is often perceived as an opportunity to apply to a commercial court, report substantial credit debt, and then proceed to debt restructuring or discharge. Recent case law, however, demonstrates a considerably more demanding approach: a debtor’s mere assertion that they are unable to meet their obligations is insufficient. The right to have insolvency proceedings opened depends on whether both the existence of the debts and the applicant’s actual financial position have been fully, consistently, and properly substantiated.

At the same time, a court may not assess insolvency at any procedural stage entirely at its own discretion. The Supreme Court has gradually distinguished between the formal review of an application, the examination of evidence at the preparatory hearing, and the subsequent assessment of the debtor’s good faith. For an applicant, this means that simply collecting a large volume of documents is not enough. It is necessary to understand which specific circumstance each document proves and at what stage the court is entitled to assess its substance.

What circumstances entitle a debtor to apply to the court?

Under Article 115(1) of the Code of Ukraine on Bankruptcy Procedures, proceedings concerning the insolvency of an individual or an individual entrepreneur may be opened exclusively upon the debtor’s own application. Unlike corporate bankruptcy proceedings, a creditor may not initiate this procedure on behalf of an individual.

Article 115(2) of the Code provides three independent grounds on which a debtor may apply to a commercial court:

• the debtor has ceased repaying loans or making other scheduled payments in an amount exceeding 50% of the monthly payments due under each credit or other obligation for two consecutive months;
• the debtor has no property against which enforcement may be levied, and the enforcement officer’s attempts to locate such property have been unsuccessful;
• there are indications of a threat of insolvency.

When calculating monetary claims, penalties, fines, default interest, and other financial sanctions are excluded. Therefore, the debtor must present the court not merely with the total amount appearing in creditors’ claims or information systems, but with the structure of the principal monetary obligation, the due dates, and the actual payment history.

Most practical questions concern the concept of a threat of insolvency. The Code does not limit it to a situation in which all obligations are already overdue or enforcement proceedings have been completed. It refers to objectively established circumstances showing that the debtor will soon be unable to perform monetary obligations or make ordinary current payments. Yet even a forecast of future insolvency cannot rest solely on the applicant’s explanations. The court must be provided with information concerning income, assets, expenses, debt burden, and the maturity dates of obligations.

The application must disclose the debtor’s entire financial position, not only the debts

The requirements governing the content of the application and the documents to be attached are set out in Article 116(2) and (3) of the Code. The court must receive not simply a list of creditors, but a set of information enabling it to compare the debtor’s liabilities with their actual financial resources.

The application must, among other things, describe the circumstances giving rise to the request, identify the applicant’s creditors and debtors, state the amounts claimed, and specify the legal grounds and due dates of the obligations. It must also be accompanied by documents concerning assets, income, bank accounts, transactions, enforcement proceedings, and declarations of assets and financial status for the period prescribed by law.

These documents are not merely formal attachments submitted for the sake of completeness. At the preparatory hearing, pursuant to Article 119 of the Code, the commercial court examines the documents, determines whether grounds exist for opening proceedings, and then issues either an order opening the case or an order refusing to do so.

In practice, the court therefore assesses not the number of pages attached to the application, but whether those materials are capable of proving specific legally relevant facts. For example, an extract from an information system may indicate that a loan entry exists, but it may not establish the legal basis of the obligation, its precise amount, the composition of the debt, or the date on which payment became due.

A credit report alone is not sufficient to prove the debt

The judgment of the Commercial Cassation Court within the Supreme Court dated 13 May 2024 in case No. 922/5486/23 was particularly important in shaping the evidentiary standard.

The Supreme Court held that the submission of a credit report alone, without the documents that gave rise to the relevant monetary obligation, is insufficient to establish the amount of the debt, the legal grounds on which it arose, and the applicable payment deadlines. Consequently, such a report is also insufficient for the court to conclude that the statutory grounds for opening insolvency proceedings exist.

The practical significance of this position extends far beyond the individual case. A credit report is compiled from information supplied by creditors to a credit bureau, but it does not replace a credit agreement, loan agreement, bank statements, a repayment schedule, a detailed debt calculation, or other primary documents.

In other words, a credit report may form part of the overall evidentiary picture, but it should not be the sole piece of evidence. For each obligation, the applicant should substantiate at least:

• the legal basis on which the obligation arose;
• the principal amount outstanding;
• the date on which performance became due;
• the amount already paid;
• the date and amount of the default;
• the distinction between the principal obligation and penalties, default interest, or other sanctions.

Where the relevant agreements are unavailable, the debtor should explain why they have not been submitted and, insofar as possible, provide other evidence, including bank statements, payment documents, correspondence with the creditor, court judgments, enforcement documents, or responses from financial institutions.

Incomplete information about assets and income may result in refusal

The Supreme Court adopted an even stricter approach in its judgment dated 27 May 2025 in case No. 906/820/24.

The Court proceeded from the premise that a debtor initiates personal insolvency proceedings not to prejudice creditors, but to achieve the legitimate purpose of the procedure: the social rehabilitation of a good-faith debtor through debt restructuring and/or debt discharge. Therefore, a person seeking the benefits of this special judicial mechanism must disclose complete and accurate information about their financial position from the outset.

The Supreme Court concluded that proceedings cannot be opened where the applicant has failed to prove the grounds under Article 115(2) because they did not provide complete and reliable information about their own assets, the assets of family members, the amount and sources of income, as required by Article 116(3), or failed to submit documents confirming that information, or otherwise acted in bad faith.

This position is important because it shifts the focus from the mere existence of debt to the relationship between all components of the debtor’s financial situation. Even substantial overdue debt does not guarantee the opening of proceedings where the applicant conceals or fails to explain assets, does not disclose sources of income, files contradictory declarations, or omits information about the financial position of family members.

The court must therefore see not an isolated fragment consisting of credit obligations, but a complete financial model: what the debtor owns, what income they receive, what regular expenses they bear, what happened to assets previously owned by them, and whether the asserted inability to repay debts corresponds to objective facts.

What grounds allow the court to refuse to open proceedings?

Article 119(4) of the Code provides an exhaustive list of grounds for refusal. The court must refuse to open proceedings where:

1. there are no statutory grounds for opening the proceedings;
2. before the preparatory hearing, the debtor has fully performed the obligations owed to the creditor or creditors;
3. the debtor has been held administratively or criminally liable for unlawful conduct connected with insolvency;
4. the debtor has been declared bankrupt during the preceding five years.

In most disputes, the first ground—absence of grounds for opening proceedings — is decisive. Within this assessment, the court determines whether the cessation of payments, absence of attachable assets, or threat of insolvency has been established by proper and admissible evidence.

The burden of proof rests primarily on the debtor. It is the debtor who initiates the procedure, possesses the most complete knowledge of their own financial affairs.

Must the debtor appear in court personally?

Proving insolvency is not limited to written documents. In certain cases, the court may require personal explanations from the applicant, particularly where the case file contains inconsistencies or where it is necessary to confirm the person’s genuine intention to enter the procedure.

In its judgment dated 5 June 2025 in case No. 904/5467/23, the Supreme Court stated that additional procedural duties arise for the debtor from the moment the application is filed, irrespective of whether the debtor is represented by counsel. A personal appearance may be necessary to establish the applicant’s identity, confirm their genuine intention to undergo the procedure, and prevent abuse by third parties.

However, failure to appear is not an automatic ground for refusal. Where the court has no doubts about the debtor’s identity or genuine intention, the application has been signed personally, a duly certified copy of the passport and all necessary documents have been provided, and the statutory grounds exist, the proceedings may be opened without the debtor’s personal attendance.

Accordingly, representation by a lawyer does not relieve the debtor of the duty to assist the court in establishing the facts. At the same time, the need for personal attendance must be assessed in light of the specific circumstances and should not be converted into a formal prerequisite in every insolvency case.