After bankruptcy declaration, the bank can no longer verify the debtor's declarations — Supreme Court decision

The Supreme Court, in a panel of judges of the Commercial Cassation Court, after considering case No. 921/562/22, denied the bank's request to close the insolvency case of an individual. The court concluded that the issue of the accuracy of the debtor's declarations had already been examined by the courts of previous instances.

Case circumstances

According to the case materials, in 2022 the Commercial Court of Ternopil region initiated proceedings on the insolvency of an individual and introduced a debt restructuring procedure. A moratorium on satisfying creditors' claims was also established, and an arbitration manager was appointed.

At the same time, the court was obliged to determine the circle of creditors, so a notice of the opening of proceedings was published. Later, in 2023, the court approved creditors' claims: the bank's claim amounted to UAH 2,903,673.40, and another creditor's claim was UAH 3,604,962.00.

In 2024, after the completion of the restructuring, the court recognized the debtor as bankrupt and opened the debt repayment procedure. However, the bank filed a petition to the court to close the proceedings. In its opinion, the debtor submitted incomplete and inaccurate information in the property declarations, and the insolvency procedure was used formally.

As a result of the consideration in the courts of first and appellate instances, it was established that at the stage of debt restructuring, the arbitration manager conducted a verification of the debtor's declarations, including sending inquiries to state bodies and registries, obtaining the necessary information, and submitting a corresponding report to the court. The verification did not reveal any incompleteness or inaccuracy in the declarations.

Supreme Court conclusions

The Supreme Court emphasized that the subject of the cassation review in this case is the legality of the decisions of the courts of previous instances regarding the issue of the presence or absence of grounds for closing the insolvency proceedings of an individual.

According to the Bankruptcy Procedure Code of Ukraine, a debtor is a natural or legal person unable to fulfill their monetary obligations within the established time. For individuals, two main court procedures are provided — debt restructuring and debt repayment, which is applied simultaneously with the recognition of the debtor as bankrupt.

According to the provisions of Book Four of the Bankruptcy Procedure Code, the legislator presumes that an individual debtor, initiating insolvency proceedings against themselves, seeks to reach a compromise with creditors regarding the method and order of fulfilling their obligations, and in case of failure to agree on a debt restructuring plan, such debtor assumes recognition of bankruptcy and satisfaction of creditors' claims from the proceeds of the sale of their property.

However, in this case, the issue of completeness and accuracy of the declarations was already subject to verification and judicial review during the debt restructuring procedure.

The Supreme Court stressed that the bank's petition is essentially aimed at a repeated review of circumstances that have already been examined by the court and served as grounds for transitioning to the debt repayment procedure. Since the relevant decision has entered into legal force and was not appealed, a repeated raising of this issue cannot be grounds for closing the proceedings.

The Court also noted that the bank did not file complaints about the actions or inactions of the arbitration manager during the debt repayment procedure.

The Supreme Court confirmed that after the case has moved to the debt repayment stage, a creditor cannot demand the closure of the proceedings solely by repeatedly referring to circumstances regarding the debtor's declarations if these issues have already been verified by the court and received proper legal evaluation.

As a result of the review, the bank's cassation appeal was dismissed, and the decisions of the courts of previous instances remained unchanged.

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