Who Are the “Family Members of the Debtor”

Is your retired father suddenly the happy owner of a downtown Kyiv apartment? Has your student daughter unexpectedly received a Tesla? In everyday life, these are private matters. But in personal bankruptcy proceedings, they become questions for the law.

When a debtor files for insolvency, it's not just their finances that come under scrutiny. The law also takes a close look at their family members — and the real question is: who exactly are they?

According to Part 5 of Article 116 of the Ukrainian Bankruptcy Code, the list goes far beyond the usual image of a nuclear family. And rightly so. In bankruptcy, we’re not dealing with emotions — we’re dealing with access to assets and potential abuse of the system.

The law clearly includes:

• a spouse (including a former spouse, if the divorce occurred within three years prior to filing),
• children — including adult children,
• parents,
• persons under guardianship or custody,
• and importantly — other individuals who live together with the debtor, share a household, and have mutual rights and responsibilities, even without being legally married.

This is not a sentimental or symbolic definition. It's a practical legal framework that allows financial investigators to track assets that may have been gifted, transferred, or hidden before the bankruptcy process began.

This special definition is not the same as in family law — and that’s not a legislative error. It’s an intentional, strategic distinction.

The Supreme Court of Ukraine, in a key ruling on case No. 910/6639/20, Commercial Cassation Court decision dated 22.09.2021, made this absolutely clear: the concept of “family members of the debtor” in bankruptcy cases is autonomous, exhaustive, and entirely independent from the definitions found in the Family Code.

And here’s another crucial detail many overlook: the conditions of cohabitation and shared household only apply to “other individuals” — not to children, parents, guardians, or even former spouses. For these categories, physical proximity doesn’t matter. Their legal and familial relationship alone is enough to trigger scrutiny.

That means: if a debtor gives away property to a child who lives in another city, or to a retired parent, the transaction is still visible to the bankruptcy system. Gifting assets to relatives just before filing? That trick no longer works.

This is exactly how the law aims to close common loopholes. For years, people operated under the illusion that “if I transfer it to my family, I’m safe.” But the law now treats these transfers as high-risk and potentially reversible.

At the same time, this approach creates a legal tension. In other areas of law — criminal, family, housing — the concept of “family member” can be broader or narrower. But the Supreme Court took a principled stance: each legal domain has the right to define its own terminology for its own goals.

For legal professionals, this ruling offers a strong guideline.

For debtors, it’s a wake-up call: your financial decisions within the family are not private in bankruptcy. If you genuinely seek a clean start through this legal tool — do it transparently. Schemes like “gift to the daughter, she sells it next week” are now legally risky and increasingly ineffective.

This isn’t about fear. It’s about a maturing system.

Bankruptcy is not an escape. It’s a structured reset. But one that requires honesty — and comes with accountability. The legal system has evolved. And it’s watching with eyes in the back of its head.