Restructuring Plan Under Judicial Scrutiny: What the Court Must Verify

The Supreme Court considered a case concerning the approval of a preventive restructuring plan for a company that was simultaneously undergoing a pre-bankruptcy rehabilitation procedure. The Commercial Cassation Court emphasized that support for the plan by a majority of creditors and the failure of individual creditors to meet the deadline for filing objections do not relieve the court of its duty to verify the accuracy of the information provided by the debtor. We examine the legal conclusions reached by the Supreme Court.

Two Solvency Restoration Procedures for the Same Company

A significant example of the application of the new preventive restructuring framework is the judgment of the Commercial Cassation Court within the Supreme Court of 12 August 2026 in case No. 904/5450/25.

The dispute concerned the approval of a preventive restructuring plan proposed by Dnipro Metallurgical Plant Private Joint Stock Company (DMZ), which offered its creditors a two-year deferral of its obligations, followed by repayment of the debt within one month. The total claims of the affected creditors exceeded UAH 1.31 billion. In the vote, creditors holding 60.45% of the voting rights in the relevant class supported the plan, while creditors holding 4.70% voted against it.

The Commercial Court of Dnipropetrovsk Region approved the plan, and the appellate court upheld that decision. However, one of the creditors, GIR-INTERNESHNL LLC, challenged the rulings, questioning the economic justification of the proposed measures and the lawfulness of applying the new procedure. The distinctive feature of the case was that, when the preventive restructuring procedure was opened, DMZ was already undergoing a pre-bankruptcy rehabilitation procedure that had begun in 2020. The previous procedure was terminated only on 27 January 2026, the very day on which the new restructuring plan was approved. Accordingly, the courts had to assess not only the plan’s formal compliance with the law but also the lawfulness of two procedures aimed at restoring the same debtor’s solvency operating simultaneously.

Can the Court Approve a Plan if a Creditor Misses the Deadline for Objections?

One of the central issues in the case was the application of Article 33-22 of the Code of Ukraine on Bankruptcy Procedures (CUBP), which sets out the grounds for refusing to approve a preventive restructuring plan.

Under paragraph 2 of that Article, the court considers whether a plan fails to meet the best-interests-of-creditors test or lacks a reasonable prospect of being implemented upon a reasoned application by an affected creditor who voted against the plan. Such an application must be filed no later than seven calendar days before the date of the final court hearing. The first-instance and appellate courts proceeded on the basis that the creditor had not filed the relevant application within the prescribed period and that there were therefore no grounds for applying items 4 and 5 of paragraph 1 of Article 33-22 of the CUBP. However, the Supreme Court drew attention to a fundamental distinction between grounds for refusal that depend on creditors taking the initiative and duties that the court must perform regardless of the parties’ procedural conduct.

In particular, item 6 of paragraph 1 of Article 33-22 of the CUBP expressly provides for refusal to approve a plan if the debtor has included inaccurate information in it. Unlike the grounds set out in items 4 and 5 of that Article, the application of this provision does not depend on a creditor filing objections within the seven-day period. Therefore, even if a creditor has not exercised its procedural right to challenge the proposed restructuring terms in time, the court must independently verify the accuracy of the information on which the plan is based. At the same time, this conclusion does not mean that the statutory deadline for objections is abolished or that every ground for refusal may be applied regardless of creditors’ applications.

Why Parallel Rehabilitation and Restructuring Procedures Require Separate Assessment

Preventive restructuring is intended to create conditions for preserving a viable business, resolving its debts and preventing insolvency before financial difficulties become irreversible.

At the same time, item 6 of paragraph 1 of Article 33-4 of the CUBP establishes restrictions on opening the relevant procedure where circumstances specified by law exist. In the DMZ case, the Supreme Court emphasized that the formal distinction between pre-bankruptcy rehabilitation and preventive restructuring cannot, in itself, justify ignoring their functional similarity. The courts should have determined whether initiating the new procedure while the previous rehabilitation procedure was still ongoing complied with the law and the principle of good faith.

Particular attention was required to the circumstances in which the previous rehabilitation procedure was terminated because its plan could not be implemented, while a new plan providing for an additional two-year deferral of obligations to creditors was approved on the same day. The Supreme Court did not, however, establish that the debtor had abused its procedural rights. Instead, it indicated that the relevant circumstances needed to be examined during the new hearing.

In practical terms, this means that a transition from one solvency restoration procedure to another must have a proper economic and legal justification, particularly where the transition is accompanied by an extension of restrictions on compulsory debt recovery.

What the Decision Means for Debtors and Creditors

The Supreme Court’s legal position is relevant to both sides of a preventive restructuring procedure. For a debtor company, it highlights the need to pay particular attention to the accuracy of financial information, the reasons underlying the threat of insolvency and the feasibility of the proposed measures to overcome it. If a company has previously used other solvency restoration procedures, it is advisable to document the reasons for their termination, changes in its financial position and the need to apply a new restructuring mechanism.

For creditors, the decision confirms that approval of a plan by a majority vote does not exclude judicial scrutiny of its lawfulness or the accuracy of the information provided by the debtor. At the same time, creditors should not rely solely on the court’s duty to examine the plan independently. If objections concern the plan’s compliance with the best-interests-of-creditors test or its prospects of implementation, creditors must comply with the specific procedure and deadlines established by paragraph 2 of Article 33-22 of the CUBP.

The timely submission of reasoned objections supported by appropriate evidence enables creditors to raise issues before the court that the legislature has expressly made dependent on their procedural initiative. Following its consideration of case No. 904/5450/25, the Supreme Court set aside the decisions of the lower courts and remitted the case to the Commercial Court of Dnipropetrovsk Region for a new hearing.

The cassation court did not make a final decision refusing approval of the restructuring plan, as the relevant circumstances require further examination and assessment of the evidence.