The Supreme Court Raises the Standard of Proof in Insolvency Cases

The ruling of the Supreme Court within the Commercial Cassation Court in case No. 902/122/25 once again confirms that in insolvency proceedings, formal confirmation of an obligation is not sufficient. The Court proceeds from the premise that the recognition of a creditor’s claim directly affects the scope of rights of other creditors and therefore creates an increased risk of artificial debt formation. For this reason, an enhanced standard of proof applies to such claims.

In this case, the creditor substantiated claims amounting to UAH 1.4 million with a loan agreement, a promissory note, and a demand for repayment. The courts of first and appellate instances recognized these claims, relying on the existence of documents and the absence of доказів погашення боргу.

The Supreme Court disagreed with this approach.

A loan agreement does not prove the existence of the obligation

The Court clearly distinguishes between the existence of a document and the reality of legal relations. A loan agreement and a promissory note may confirm the formalization of an obligation but do not, in themselves, prove the actual transfer of funds. Where objections are raised by other participants in the proceedings, the creditor must prove the actual existence of the monetary obligation. This requires an assessment not only of the documents themselves but also of their consistency, origin, and economic substance.

Accordingly, the standard of proof in such disputes goes beyond formal confirmation and extends to the factual circumstances of performance.

Application of Article 91 of the Commercial Procedure Code: copies are not self-sufficient evidence

The Supreme Court also addressed the requirements of Article 91 of the Commercial Procedure Code of Ukraine. Written evidence must be submitted either in original or as a duly certified copy. If the conformity of a copy to the original is challenged, the court must verify it, including by requesting the original.

If the original is not provided and the doubts remain unresolved, such evidence cannot be relied upon in the court’s decision. In this case, the appellate court effectively ignored these requirements: it did not determine whether doubts regarding the copies had been raised and did not assess the necessity of requesting the originals.

Limits of the court’s procedural activity

The Court also emphasized the principles of adversarial proceedings and dispositiveness. It is the parties who determine the scope and content of the evidence they submit and who bear the risk of its insufficiency. The court is not obliged to build the evidentiary basis in place of a party.

In this context, the Supreme Court critically assessed the use of tax information obtained by the court without a proper procedural order. Such use does not meet the requirements of admissibility of evidence.

Incomplete appellate review

Another ground for setting aside the decision was the incomplete appellate review. The appellate court failed to examine arguments regarding the possible fictitious nature of the obligation, did not assess allegations of abuse of insolvency procedures, and did not provide reasoning for rejecting key objections raised by another creditor.

Under such circumstances, the appellate court’s conclusions were deemed premature.

Legal significance of the ruling

The decision in case No. 902/122/25 establishes several important approaches.

1. First, insolvency proceedings do not allow for the automatic recognition of debt based solely on formal documents.
2. Second, the creditor must prove the actual existence of the obligation under an enhanced standard of proof.
3. Third, the court may not compensate for deficiencies in a party’s evidence by independently collecting evidence outside the procedural framework.

Overall, this ruling shifts the focus from the formal confirmation of legal relations to their substantive reality, which is of fundamental importance for insolvency practice.