Bankruptcy of an Enterprise in Ukraine: What Happens After the Court Decision and How Liquidation Takes Place
The recognition of an enterprise as bankrupt does not automatically lead to its immediate closure or a write-off of all debts. Following a commercial court's decision, the liquidation procedure commences. This is the final stage of a bankruptcy case, involving the identification of company property, the sale of assets, and the settlement of claims with creditors.
As clarified by the Ministry of Justice of Ukraine, if an enterprise is unable to meet its financial obligations and cannot restore solvency, the commercial court may rule to declare the debtor bankrupt and initiate liquidation.
According to the Code of Ukraine on Bankruptcy Procedures, subsequent to such a decision, the court appoints a liquidator. This arbitration manager is granted the authority to manage the enterprise's property.
Upon the opening of the liquidation procedure, the powers of the enterprise's head and management bodies to dispose of property are terminated. All relevant functions are transferred to the liquidator.
The liquidator undertakes an inventory of assets, ascertains the composition of the enterprise's property, searches for potential debtor assets, and forms the liquidation estate. Should the enterprise continue production activities, these may only be completed after the end of the technological cycle or in circumstances necessary to preserve the property.
The liquidation estate comprises all property assets and rights belonging to the enterprise at the time the liquidation procedure began, as well as any property discovered during its course. After valuation, these assets may be realised in accordance with the law. The proceeds are then used to cover the costs of the bankruptcy case and satisfy creditors' claims.
Settlements with creditors are conducted in the order prescribed by law. This order is designed to ensure transparency and equality among all participants in the case. The extent to which debts can realistically be repaid is determined by the enterprise's available property. The mere fact of being declared bankrupt does not imply an automatic cancellation of all financial obligations.
Upon completion of property sales and the necessary settlements, the liquidator submits a report and the enterprise's liquidation balance sheet to the commercial court. If the court approves these documents, a decision is made to liquidate the legal entity. Subsequently, information regarding the termination of the enterprise's activity is entered into the Unified State Register.
As previously written by «Judicial-Legal Newspaper», Supreme Court judges presented current legal approaches to judicial review of decisions on the application of personal sanctions, as well as discussed new mechanisms to circumvent sanctions in bankruptcy procedures.
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