Can an Assignment Agreement Be Invalidated Because the Debt Amount Is Disputed?

The market for distressed debt has long become an integral part of the financial system. Banks sell loan portfolios, financial companies acquire claims, and debtors frequently attempt to challenge such transactions in court. One of the most common arguments is that a creditor transferred a claim relating to a debt whose amount is disputed or includes unlawfully accrued interest, penalties, or other charges. However, in its decision of April 2, 2026, in case No. 757/1790/22-c, the Supreme Court effectively confirmed that a dispute over the amount of indebtedness does not affect the validity of an assignment of claims agreement.

Background of the Dispute

The claimant sought to invalidate assignment agreements concluded between a bank and a financial company. Among the key arguments was the assertion that the debt either did not exist or had been calculated incorrectly, while certain components of the debt had been accrued without sufficient legal grounds. Both the trial court and the appellate court dismissed the claim. The Supreme Court upheld those decisions.

What Constitutes a Valid Claim?

In its ruling, the Supreme Court emphasized the fundamental distinction between two separate issues:

• whether the claim itself exists; and
• whether the agreement transferring that claim is valid.

In practice, these concepts are often mistakenly treated as identical. The Court noted that Articles 514 and 519 of the Civil Code of Ukraine primarily regulate the relationship between the original creditor and the new creditor. If a transferred claim later proves to be nonexistent, terminated, or legally non-transferable, this does not automatically render the assignment agreement invalid. In other words, even if it is later established that part of the claim was unfounded or that the debt amount was different from what had been stated, this alone does not invalidate the assignment agreement.

Absence of a Valid Claim and Invalidity of the Agreement Are Different Legal Consequences

An important aspect of the Court’s reasoning concerns the legal consequences of transferring a problematic claim. The Court explained that where a claim did not exist or had already been extinguished before the transfer, the assignment may fail to produce its intended proprietary effect. In such circumstances, the new creditor may not acquire the corresponding right.

However, the legal consequence is not the invalidity of the assignment agreement itself. Rather, the original creditor may incur civil liability toward the new creditor for transferring a defective claim. Thus, the law clearly distinguishes between disputes concerning the debt itself and the validity of the transaction through which the claim was transferred.

Why This Ruling Matters for the Financial Market

The Supreme Court’s approach has significant practical implications for the stability of the claims assignment market. If every dispute regarding the amount of debt automatically called assignment agreements into question, banks, investors, and financial companies purchasing loan portfolios would face substantial legal uncertainty. The Court effectively confirmed that a debtor cannot rely solely on disagreement with the amount of indebtedness as a universal tool to challenge the transfer of a claim to a new creditor.

Debtors’ Rights Remain Protected

At the same time, this legal position does not deprive debtors of the right to contest unlawful charges. A debtor may still challenge the amount of indebtedness, argue that specific components of the debt do not exist, rely on the termination of the obligation, invoke limitation periods, or raise other defenses affecting the extent of liability.

However, such objections must be addressed within proceedings concerning the underlying obligation itself rather than through attempts to invalidate the assignment agreement between the original and the new creditor.

Practical Takeaway

The Supreme Court’s decision in case No. 757/1790/22-c further confirms that the assignment of claims operates under an independent legal framework. A dispute regarding the amount of debt, particular charges, or even the existence of part of the indebtedness does not automatically create grounds for invalidating an assignment agreement.

For debtors, this means that selecting the correct legal strategy is crucial. For banks and financial companies, the ruling reinforces confidence in the stability of claim assignment mechanisms. For legal practitioners, it provides another important benchmark when developing litigation strategies in disputes involving distressed debt and transferred claims.