Changing the Creditor’s Status in Bankruptcy Proceedings: Key Insights

One of the most sensitive issues in bankruptcy proceedings remains the determination of a creditor’s status, their voting rights, and the ability to influence the further course of the procedure. Judicial practice and recent amendments to the Code of Ukraine on Bankruptcy Procedures (CUBP) confirm that even minor changes in a creditor’s status can significantly affect voting distribution, approval of the reorganization plan, and decision-making by the creditors’ committee.

Creditors’ Committee: Representation and Voting Rights

The creditors’ committee is the central body in bankruptcy proceedings that effectively determines the fate of the debtor. It is formed at the first creditors’ meeting, which is deemed valid if participants holding at least two-thirds of all votes are present. A creditor with more than 25% of the total votes automatically becomes a member of the committee, granting them substantial influence over strategic decisions in the case.

The committee’s competence includes the dismissal of the insolvency practitioner, approval of asset sale terms, extension of rehabilitation or liquidation periods, and submission of motions to the court regarding procedural changes. The liquidator is obliged to report to the committee at least once a month on the debtor’s assets, cash flow, and progress of the liquidation process. Thus, the committee ensures a balance between the insolvency practitioner’s powers and creditors’ oversight.

Who Has the Decisive Vote

Only competitive creditors whose claims have been recognized by the court following the preliminary hearing have a decisive vote. Creditors deemed related to the debtor are deprived of this right. The number of votes per creditor equals the amount of their recognized claims included in the register. This register forms an integral part of any creditors’ meeting protocol and is maintained by the liquidator under Article 61 of the CUBP.

According to the Supreme Court’s position in case No. 904/10560/17, amendments to the register can be made only based on a court ruling or factual satisfaction of the creditor’s claims — for example, through asset realization, debt forgiveness, or payment outside the liquidation estate. This confirms that the liquidator’s duty is not merely administrative — they must promptly reflect any changes in the structure of creditors’ claims.

Recognizing a Creditor as Related: New CUBP Guidelines

Following the adoption of Law No. 3985-IX in September 2024, the approach to identifying related creditors has changed. The court is now required to determine each creditor’s status in its ruling at the preliminary hearing, rather than leaving this to the insolvency practitioner or other participants. If a ruling recognizing a creditor’s claim was issued before January 1, 2025, the court may issue an additional ruling on relatedness to ensure legal certainty.

This approach was reaffirmed by the Supreme Court in cases No. 903/534/23 (29.07.2025) and No. 914/466/23 (17.09.2025), which clarified that the updated provisions of the CUBP have retrospective effect and apply even to cases opened before 2025. This creates a unified legal framework: courts are entitled to review a creditor’s status in ongoing cases if this is necessary to restore fairness and protect the rights of other participants.

Amending the Register and the Principle of Res Judicata

Judicial practice also firmly establishes that a creditor cannot repeatedly apply for recognition as a secured creditor concerning the same collateral. This position is based on the principle of res judicata — the finality of judicial decisions. The Supreme Court, in case No. 921/184/16-г/10 (16.12.2020), emphasized that such repeated applications effectively constitute an attempt to review a prior ruling, which contradicts the principle of legal certainty.

At the same time, changes in collateral value, repayment by a guarantor, or waiver of the pledge may justify adjustments to the creditors’ register. In decision No. 916/1142/18 (27.05.2021), the Supreme Court clarified that once the pledged asset is sold, the secured creditor’s claim against the debtor is extinguished within the amount received, while the remaining balance is transferred to the register of unsecured claims.

A Flexible Register as a Foundation of Effective Procedure

Bankruptcy proceedings inherently require a flexible approach to maintaining the creditors’ register. The value of collateral may fluctuate, debts may be partially repaid, and claims may evolve or be withdrawn. Modern Supreme Court practice demonstrates that maintaining the register is not a technical duty but a vital legal mechanism ensuring transparency and certainty among all participants.