When Assets Are Under Occupation: The New Approach of the Supreme Court

The full-scale war has confronted Ukrainian law with challenges it had never faced before. One of the most complex among them is this: what happens when a business loses its assets not due to financial mismanagement, but because those assets are under occupation? Can such a company truly be considered bankrupt if it has simply lost access to its property?

Traditionally, bankruptcy follows a clear logic: there is a debt — there is no way to pay it — the debtor is insolvent. But war has shattered this formula. When a company’s entire production complex remains, for example, in Berdyansk or Melitopol, the business cannot operate — not due to poor management, but because of occupation. The Supreme Court of Ukraine has recognized this as an objective ground for legal protection. In 2023, an important amendment was added to the Bankruptcy Procedures Code of Ukraine — Clause 1-6 of the Final Provisions — which prohibits courts from opening bankruptcy proceedings at a creditor’s request if non-performance of obligations is caused by Russia’s armed aggression. This effectively grants such debtors a “wartime immunity”.

When the Procedure Loses Its Purpose

But what if the case had already been opened — and the debtor’s assets later became unreachable? The Supreme Court addressed this issue in its decision of 15 April 2025, case No. 913/355/21. The Court held that if the main part of a debtor’s property is located in temporarily occupied territory and cannot be realized, the bankruptcy case must be closed.

The reasoning is pragmatic. Liquidation without assets is fiction. Neither the liquidator nor creditors have any real means to act, as selling property in occupied areas is impossible. The Court explicitly stated that continuing such proceedings would violate the principle of procedural economy. For the first time, the mere loss of access to property was recognized as a sufficient ground to terminate a bankruptcy case.

This decision marked a turning point: it allowed courts to close “dead” cases that had been dragging on for years, where completing liquidation was objectively impossible. Creditors, of course, face serious difficulties. The wartime moratorium has effectively placed their claims “on hold.” Yet this does not cancel the debts — it only postpones enforcement.

War cannot be an excuse for bad faith, but neither should it become a trap for those who lost everything through no fault of their own.