NBU Currency Restrictions Do Not Affect the Opening of Bankruptcy Proceedings

The introduction of martial law in Ukraine has placed businesses in a situation where fulfilling foreign currency obligations to non-residents has become not only economically difficult but, in some cases, technically impossible. Resolution No. 18 of the National Bank of Ukraine, dated February 24, 2022, effectively blocked most cross-border currency transfers, leaving only a narrow range of exceptions. This raises a logical question: if a debtor is objectively unable to make a payment, can this serve as an argument against opening bankruptcy proceedings?

The answer provided by both legislation and court practice is rather strict: it cannot.

Formalism of Bankruptcy Proceedings as a Principle, Not a Flaw

The Code of Ukraine on Bankruptcy Procedures structures the opening of proceedings around clear and, importantly, formalized criteria. The focus is not on assessing the reasons for insolvency, but on establishing legal facts. As follows from Part 1 of Article 39 of the Code, and as confirmed by the position of the Commercial Cassation Court within the Supreme Court (decision dated March 20, 2024, case No. 911/1005/23), only three conditions are required to open proceedings: the existence of an overdue monetary obligation, the absence of a dispute over the right, and the failure to satisfy the creditor’s claims before the preparatory hearing.

This list is exhaustive and cannot be expanded by the court. In other words, the law does not grant the court the authority to consider the “validity” of reasons for non-performance at the stage of opening proceedings.

Currency Restrictions: A Cause, but Not a Procedural Barrier

The introduction of currency restrictions can indeed objectively hinder or even make it impossible to fulfill obligations to foreign creditors. However, within the logic of bankruptcy law, this is irrelevant for deciding whether to open proceedings.

The court does not analyze why the debtor failed to perform the obligation — it determines that the obligation has not been performed. This is the fundamental distinction between economic and legal assessment. Economically, a debtor may remain solvent but restricted in access to foreign currency operations. Legally, the debtor has an overdue monetary obligation and therefore formally meets the criteria of insolvency.

This is why references to NBU currency restrictions cannot serve as grounds for refusing to open proceedings, as such grounds are not предусмотрены directly by the Code.

Case Law: Formalism Confirmed by Judicial Practice

The approach of commercial courts to this issue is consistent and formalized, as confirmed both by the Supreme Court’s position and by the practice of courts of first instance.

In particular, in its decision of March 20, 2024 (case No. 911/1005/23), the Commercial Cassation Court within the Supreme Court explicitly stated that, when deciding on the opening of bankruptcy proceedings, the court verifies solely the existence of a monetary obligation whose term has expired, the absence of a dispute over the right, and the fact of its non-performance by the debtor — without assessing the reasons for such non-performance.

A similar approach can be observed at the level of first instance courts. For example, the Commercial Court of Kyiv, in its ruling of May 1, 2025 (case No. 910/11247/23), despite the existence of restrictions on cross-border currency transactions and difficulties in settlements with a foreign creditor, did not consider these circumstances as an obstacle to the progression of the procedure, but instead took them into account at the liquidation stage.

Thus, judicial practice clearly distinguishes: currency restrictions may affect the method and timing of debt repayment, but they do not alter the legal nature of the obligation itself and are not grounds for refusing to open bankruptcy proceedings.

Conclusion: The Line Between “Cannot” and “Must”

The situation with currency restrictions highlights one of the fundamental features of bankruptcy law: at the initial stage, it does not operate with notions of fairness or economic feasibility, but rather with clearly defined legal facts.

Currency restrictions may explain why a debtor failed to fulfill its obligations. However, they do not change the fact of non-performance and do not create procedural barriers to the opening of bankruptcy proceedings.

This is why it is critical for businesses not only to respond to economic constraints but also to timely assess legal risks that arise regardless of the reasons behind financial difficulties.