Business Advantages: Why Restructuring Is Still More Beneficial Than Bankruptcy

The introduction of preventive restructuring aims to shift the focus of the insolvency system — from liquidation to rehabilitation.

For businesses, this creates a range of concrete advantages:

• Preservation of operations and assets. The main goal is to avoid bankruptcy. Unlike liquidation, where the business ceases to exist and assets are sold off, restructuring allows the company to continue operating, retain its assets, and preserve jobs. As experts aptly put it, it’s like a ship avoiding an iceberg by changing course — the company has a chance to survive and continue bringing value to its owners, employees, and the economy. This is especially relevant today, when every functioning enterprise is of great importance for the country’s post-war recovery.

• Speed of the procedure. Traditional bankruptcy proceedings can drag on for years, gradually draining a business both financially and organizationally. In contrast, preventive restructuring is designed to be time-limited. The law sets a maximum duration of six months. Within this period, the debtor must either reach an agreement with creditors and approve a plan or, if unsuccessful, the procedure is terminated and regular bankruptcy proceedings may follow. These limited timelines motivate all parties to act promptly.

• Reduced costs and losses. Restructuring is less costly than bankruptcy — this is supported by both lawmakers and practitioners. First, there are no liquidation costs, and the company’s going concern value is preserved. Second, a restructuring administrator is involved only when necessary, so the fees are lower than the mandatory costs in bankruptcy cases (e.g., property manager, liquidator). Third, the negotiation and planning process is less formalized, saving money on legal proceedings. Ultimately, avoiding liquidation spares owners the pain of having to sell assets for a pittance and losing the business, while creditors have a better chance of recovering more than they would in a bankruptcy scenario. European experts emphasize that restructuring minimizes not only direct expenses but also indirect losses — protecting reputation, customers, and employee teams.

• Flexibility and mutual benefit. Unlike the rigid bankruptcy process, which follows the principle of competitive satisfaction of claims, preventive restructuring is a win-win mechanism (if successful). The debtor gets a break and a chance to recover, while creditors gain better prospects of debt repayment than in liquidation. The negotiation process allows the interests of different parties to be considered and compromise solutions to be found. For example, creditors may agree to defer or reduce the debt while retaining a business client who continues to operate and gradually repays the obligations. The debtor, in turn, commits to strictly implementing the restructuring plan under creditor and court supervision. Such cooperation builds trust between the parties. It also encourages business owners not to fear the term “restructuring” — it is seen as a recovery process, not the end of the enterprise.

First Case: Not Long to Wait

As mentioned above, the provisions on preventive restructuring only came into effect in 2025, so judicial practice is still taking shape. At the time of writing, only a handful of such cases existed. Moreover, as of late January 2025, Ukrainian courts had not yet received a single application to initiate a preventive restructuring procedure. However, the first precedent emerged in the spring.

The first such case involves Tri O LLC — a Kyiv-based real estate rental company. According to the Opendatabot platform, a notice regarding the start of the procedure appeared on the Supreme Court’s website on March 3, 2025. The case is being considered by the Commercial Court of Kyiv, with a final hearing (to review the plan) scheduled for July 16, 2025.

Thus, this case will serve as a revealing test of the new procedure in action. It is known that the initiative came from the business owner, who assessed the seriousness of the financial difficulties in advance and decided to pursue restructuring to modify the debt obligations without halting operations.