Closing Bankruptcy Proceedings: The Recent Supreme Court Case Law

Closing bankruptcy proceedings is often perceived as a purely technical final step: once the procedure has exhausted itself, the court merely has to formalise its completion by issuing a ruling. However, the structure of Article 90 of the Bankruptcy Code (BPCU) is considerably more complex, as a single procedural mechanism is used to terminate cases arising from fundamentally different legal circumstances — from restoration of solvency and satisfaction of creditors’ claims to the absence of insolvency, privatisation of the debtor, or circumstances in which continuing the bankruptcy proceedings loses its legal purpose.

The Article 90 effectively contains fifteen grounds for closing proceedings, although the numbering ends with paragraph 14: in 2024, paragraph 8-1 concerning a specific category of critical infrastructure operators was inserted between paragraphs 8 and 9. This detail is relevant not only for counting the grounds. Part 2 of Article 90, which determines the procedural stages at which specific grounds may be applied, was not amended accordingly when paragraph 8-1 was introduced.

Different Grounds — Different Legal Nature

1. The first group consists of situations in which the subject of the proceedings disappears or a defect concerning that subject is identified: a legal entity has not been entered in the Unified State Register, has been terminated in accordance with the law, or an individual debtor has died, been declared dead or declared missing.
2. The second group concerns procedural impossibility or the absence of prerequisites for continuing the bankruptcy case: another case already exists in respect of the same debtor, the dispute does not fall within the jurisdiction of Ukrainian commercial courts, or the court has failed to establish signs of insolvency.
3. The third group covers the normal completion of the procedure: solvency has been restored or all claims included in the creditors’ register have been satisfied, the report of the rehabilitation manager or liquidator has been approved, no creditors have filed claims after proceedings initiated by the debtor were opened, or the parties have concluded a settlement agreement.

Separate statutory regimes apply to certain critical infrastructure operators, the wholesale electricity supplier, and enterprises in which the State owns more than 50% and for which a privatisation decision has been adopted. Finally, paragraph 14 permits proceedings to be closed in other cases expressly provided for by the BPCU.

The Stage of the Proceedings Matters

Part 2 of Article 90 establishes a strict stage-based filter. Grounds under paragraphs 2, 3, 5, 9, 10, 12 and 13 may be applied both before and after a debtor is declared bankrupt. Paragraphs 1, 4, 6, 8 and 11 operate only before the debtor is declared bankrupt, while approval of the liquidator’s report under paragraph 7 naturally applies only after bankruptcy has been declared. However, the legislature has left two obvious gaps: Part 2 expressly mentions neither paragraph 8-1 nor paragraph 14.

As regards paragraph 14, the position was partially clarified by the Supreme Court in 2026.

In its judgment of 21 January 2026 in case No. 927/149/22, the Bankruptcy Chamber of the Commercial Cassation Court within the Supreme Court distinguished between two mechanisms for satisfying creditors’ claims. Where all claims are satisfied under paragraph 5 of Part 1 of Article 90, proceedings may be closed at any stage, including liquidation. By contrast, the Court held that closure under Part 7 of Article 41 in conjunction with paragraph 14 of Part 1 of Article 90 is possible only before the debtor is declared bankrupt. Accordingly, the absence of paragraph 14 from Part 2 does not mean that this provision may automatically be applied at any stage.

Paragraph 11: Can Insolvency Be Reassessed?

Paragraph 11 of Part 1 of Article 90 allows bankruptcy proceedings to be closed where the commercial court has not established signs of the debtor’s insolvency. At first glance, this appears paradoxical because the court already examines whether grounds exist for opening bankruptcy proceedings at the preparatory hearing under Article 39 of the BPCU.

The Supreme Court effectively addressed this tension earlier in case No. 905/2030/19 concerning the bankruptcy of PJSC “Herkules”. In its judgment of 3 June 2020, the Commercial Cassation Court stated that the debtor’s actual financial and economic condition is established not only on the basis of materials available at the time proceedings are opened, but also by examining the analysis prepared by the asset administrator under Article 44 of the BPCU. If, during the asset administration procedure, the court establishes that there are no signs of insolvency, the proceedings must be closed. At that time, this ground was contained in paragraph 8 of Article 90; following legislative amendments, it is now found in paragraph 11.

Payment of Debts Does Not Always Mean That the Court Can Immediately Close the Case

Recent Supreme Court case law has added another important condition to Article 90 that is not expressly stated in its wording. In the same case No. 927/149/22, creditors’ claims had been satisfied, and the appellate court therefore closed the proceedings, relying on the mandatory nature of paragraph 5 of Part 1 of Article 90. However, the issue of the liquidator’s remuneration and expenses remained unresolved. The Bankruptcy Chamber of the Commercial Cassation Court overturned the appellate judgment and formulated a general rule: consideration of the insolvency practitioner’s report on the accrual and payment of remuneration and reimbursement of expenses is a mandatory prerequisite for closing bankruptcy proceedings, irrespective of the particular ground for closure. Where a case is terminated because all claims have been satisfied under paragraph 5 of Article 90 and the debtor continues to exist, the costs of the insolvency practitioner’s remuneration are borne by the debtor.

Part 4: When Closure Extinguishes the Debt

Creditors should pay particular attention to Part 4 of Article 90. In cases provided for by paragraphs 5–8 of Part 1, the court must state that the claims of unsecured creditors which were not filed within the period established by the Code or were rejected by the court are deemed discharged, while enforcement documents relating to such claims are declared unenforceable.

A creditor’s inactivity may therefore result in consequences far more serious than merely losing voting rights or the ability to influence the proceedings. Where the statutory conditions are met, the creditor loses the ability to enforce the claim itself. At the same time, Part 7 of Article 41 allows the debtor, the owner of its property, the holder of its corporate rights or a third party to satisfy all claims of unsecured creditors in accordance with the register, excluding penalties.

Following the Supreme Court’s judgment in case No. 927/149/22, however, it is particularly important to select the correct procedural mechanism. The mechanism under Part 7 of Article 41 in conjunction with paragraph 14 of Article 90 applies before the debtor is declared bankrupt, whereas paragraph 5 of Article 90, following the 2023 amendments, allows proceedings to be closed because the creditors’ register has been fully satisfied even at the liquidation stage.

Paragraph 14 Is No Longer Merely a “Technical” Cross-Reference

Another illustrative example can be found in the Commercial Cassation Court’s judgment of 15 April 2025 in case No. 913/355/21.

Most of the debtor’s assets were located in temporarily occupied territory, the liquidator had unsuccessfully attempted to locate other assets, and the procedure had continued beyond the statutory period. The lower courts refused to close the proceedings, but the Supreme Court held that provisions of the Final and Transitional Provisions of the BPCU prohibiting the opening of creditor-initiated bankruptcy proceedings in certain circumstances connected with the location of an enterprise’s single property complex in occupied territory may, in an already pending case, constitute an “other case” within the meaning of paragraph 14 of Part 1 of Article 90.

The case was remitted for reconsideration so that the court could assess whether completing the liquidation procedure was realistically possible and whether the liquidator had taken all necessary actions. This case demonstrates the function of paragraph 14: it enables Article 90 to interact with other provisions of the Code where the literal list of grounds does not directly cover the circumstances, but continuing the procedure would objectively conflict with its purpose.

Practical Implications for the Parties

For a creditor, Article 90 means that the bankruptcy case must be monitored until its very end, because the consequence of missing procedural opportunities may be not merely the loss of influence over the proceedings but the discharge of the claim and the loss of the ability to enforce an existing enforcement document.

For a debtor, paragraph 11 and the mechanisms for satisfying the creditors’ register are particularly important. The opening of bankruptcy proceedings does not necessarily make bankruptcy inevitable if subsequent financial analysis disproves insolvency or if resources become available to settle all registered claims.

Recent Supreme Court case law also demonstrates that closure cannot be treated as a purely formal final ruling. Before terminating proceedings, the court must correctly identify not only the statutory ground but also the stage at which it may be applied, the consequences for unfiled claims, the status of enforcement documents and the remuneration of the insolvency practitioner.