Closing Bankruptcy Proceedings: the Article 90 of the Bankruptcy Code

The issue of closing bankruptcy proceedings has long been perceived as a final, almost technical stage of the process; however, the development of judicial practice, particularly at the level of the Supreme Court, has gradually shifted the focus from the formal list of grounds set out in Article 90 of the Code of Ukraine on Bankruptcy Procedures to their substantive meaning and consequences, with the result that the decision to close proceedings increasingly determines not only how a case ends, but whether it achieves its purpose at all.

This shift is most clearly reflected in the distinction between “classical” and “non-typical” grounds for closing proceedings, which, although not expressly enshrined in legislation, is effectively used by courts as an analytical framework allowing them to distinguish between situations in which the procedure concludes with a tangible result and those in which it is terminated while leaving the underlying economic conflict unresolved.

When closure means completion: the logic of “classical” grounds

If one proceeds from the structure of Part 1 of Article 90 of the Bankruptcy Code, “classical” grounds are those directly connected either with the restoration of the debtor’s solvency or with the exhaustion of the very purpose of the procedure, and it is precisely for this reason that they ensure a correlation between the formal closure of proceedings and the actual termination of legal relations between the debtor and creditors.

These include, in particular, cases involving the restoration of the debtor’s solvency or the full satisfaction of creditors’ claims in accordance with the register of claims, as provided for in paragraph 5 of Part 1 of Article 90, as well as situations involving the approval of the report of the restructuring (rehabilitation) manager under paragraph 6 of the same provision, where the procedure is concluded as a result of the implementation of a restructuring plan rather than its premature termination.

A similar logic applies where no creditor claims are filed following the official publication of the notice on the opening of proceedings, as provided for in paragraph 8 of Part 1 of Article 90, or where the commercial court establishes the absence of insolvency indicators pursuant to paragraph 11 of the same article, as well as in cases involving the conclusion of an amicable settlement between the debtor and creditors in accordance with Article 192 of the Commercial Procedure Code of Ukraine and paragraph 12 of Part 1 of Article 90.

In such cases, the closure of proceedings does not create additional legal gaps, since the procedure has either fulfilled its function or proved unnecessary, and this approach is consistently reflected in the case law of the Supreme Court, including in cases No. 924/1277/20 and No. 924/812/22, where the emphasis is placed not only on the formal ground for closure, but also on the actual state of the legal relationship between the debtor and creditors.

When closure does not mean resolution: the problem of “non-typical” grounds

In contrast, “non-typical” grounds for closing proceedings, which are also provided for in Article 90 of the Bankruptcy Code and its transitional provisions, reflect a fundamentally different logic, as their application is not linked to achieving the outcome of the procedure but rather to the existence of special conditions or limitations that affect the very possibility of its continuation.

Such cases include, for example, situations where the debtor meets the criteria of a critical infrastructure operator and its shares were compulsorily expropriated during martial law, provided that the state directly or indirectly holds more than fifty percent of the capital, as stipulated in paragraph 8-1 of Part 1 of Article 90, as well as cases where the debtor is a wholesale electricity supplier pursuant to paragraph 9 of the same provision.

A separate category is formed by the provisions of the “Final and Transitional Provisions” of the Bankruptcy Code, in particular paragraphs 1-6 and 1-8, which allow for the closure of proceedings in connection with the execution of state defense contracts or due to the impact of armed aggression, including situations where the debtor’s assets are located in areas of hostilities or temporarily occupied territories, thereby effectively placing bankruptcy proceedings beyond the traditional framework of private law and subordinating them to public interests.

In such situations, the closure of proceedings does not imply either the restoration of the debtor’s solvency or the satisfaction of creditors’ claims, creating what can be described as a “procedural reset,” where the process is terminated while the underlying economic problem remains unresolved.

Case law: how different grounds produce different outcomes

This gap between formal closure and substantive resolution is particularly evident in specific cases where courts have been required to go beyond the literal application of Article 90.

In cases No. 917/247/23 and No. 917/1627/22, proceedings were closed without any real resolution of insolvency issues, effectively depriving creditors of the opportunity to enforce their claims within the framework of the procedure and forcing them back into individual enforcement mechanisms that lack the concentration of disputes inherent in bankruptcy proceedings.

In cases No. 910/18228/23 and No. 905/45/25, another dimension becomes apparent — the dependence of the outcome on the procedural conduct of the parties, where inactivity or procedural errors lead to the closure of proceedings despite the continued existence of objective grounds for their continuation.

At the same time, in cases No. 913/355/21, No. 902/1169/21 and No. 915/1624/16, the issue arises of the interplay between Article 90 of the Bankruptcy Code and Article 231 of the Commercial Procedure Code of Ukraine, which governs the closure of proceedings in a broader procedural sense, and it is in this context that courts effectively shape the approach to determining the priority of the special bankruptcy rules over general procedural provisions.

What this means in practice

Ultimately, it can be concluded that the closure of bankruptcy proceedings is no longer a neutral procedural step but rather a decisive point at which it is determined whether the purpose of the procedure has been achieved or whether it has merely been formally terminated, leaving the parties with the same conflict with which the process began.

It is precisely for this reason that the distinction between “classical” and “non-typical” grounds is not merely theoretical but has clear practical implications, as it allows for predicting the consequences of closing proceedings and understanding in which cases such a decision signifies the completion of the case and in which it represents only a transition to another form of dispute.