The Supreme Court determined the jurisdiction of complaints against the actions of the state executor regarding the bankrupt debtor

After the opening of proceedings in the bankruptcy case of the debtor, all property disputes and claims, the resolution of which may affect the size or composition of the liquidation estate, are subject to consideration by the commercial court within the bankruptcy case, including complaints filed in the procedure of judicial control over the enforcement of court decisions regarding such debtor.

These conclusions were reached by the Supreme Court in the composition of the United Chamber of the Commercial Cassation Court in case No. 604/774/24.

Case circumstances

In the reviewed case, a farming enterprise (debtor) challenged the inaction and actions of the state executor who, after the opening of the bankruptcy case against the debtor, did not suspend the enforcement proceedings but imposed a seizure on funds and carried out their recovery.

The courts denied the complaint, referring to the fact that the applicant's rights were not violated and the executor's actions complied with the law.

The United Chamber was faced with the legal issue of jurisdiction: which court considers complaints against the actions and inaction of the state executor filed within the enforcement proceedings regarding a debtor against whom bankruptcy proceedings have been opened, which may affect his property assets.

What the Supreme Court decided

The United Chamber of the Commercial Cassation Court of the Supreme Court annulled the decisions of the lower courts and transferred the case to the appropriate commercial court by jurisdiction, making the following legal conclusions.

As a general rule, judicial control over the enforcement of court decisions in civil cases is exercised by the court that considered the case as the court of first instance.

At the same time, procedural law establishes a mandatory rule of exclusive jurisdiction over bankruptcy cases and disputes with property claims against a debtor in respect of whom bankruptcy proceedings have been opened.

According to part 2 of article 7 of the Law on Bankruptcy Procedure (LBP), all property disputes and claims against a debtor in respect of whom bankruptcy proceedings have been opened are considered by the commercial court within such case.

The concentration of property disputes involving the debtor exclusively within the bankruptcy case, as established by article 7 of the LBP, allows for effective judicial control over the preservation of the debtor's property assets at his disposal, with the aim of restoring the debtor's solvency or proper formation of the bankrupt's liquidation estate.

Thus, from the date of entry into force of the LBP, i.e., from October 21, 2019, the consideration of all property disputes involving the debtor must take place in the commercial court within the bankruptcy case being considered by that court.

The United Chamber of the Commercial Cassation Court of the Supreme Court clarified that when deciding on the necessity of considering a dispute involving a person against whom bankruptcy proceedings have been opened, courts should consider not only whether the claims are subject to monetary valuation but also assess the content of the claims and the violated right or interest for the protection of which the relevant application or lawsuit was filed.

Since the consequence of satisfying the claims of a complaint within the judicial control over the enforcement of a court decision regarding a debtor against whom bankruptcy proceedings have been opened may be a change in the size or composition of the liquidation estate, such a complaint is subject to consideration by the commercial court in whose proceedings the debtor's bankruptcy case is pending.

Therefore, if the enforcement of a court decision and judicial control over its enforcement may affect the volume of the debtor's liquidation estate, the relevant issues must be resolved by the commercial court within the bankruptcy case.

Subscribe to our Telegram channel t.me/sudua and to Google News SUD.UA, as well as to our VIBER and WhatsApp, our page on Facebook and on Instagram to stay informed about the most important events.