A European-owned manufacturing group with operations in central Ukraine faced simultaneous debt calls from creditors based in three different countries. Each creditor held security interests documented under different governing laws. The Ukrainian operating entity was running out of liquidity, and uncoordinated enforcement actions threatened to dismember the business before any consensual solution could be built.
Corporate restructuring in Ukraine requires coordinating insolvency proceedings under Ukrainian insolvency legislation with parallel creditor positions governed by foreign law. The appointment of a qualified administrator and the convening of a creditors meeting are the two procedural anchors around which a viable restructuring plan must be constructed. Without early coordination across these elements, fragmented enforcement by individual creditors can foreclose the opportunity for a consensual outcome.
This case study sets out how the engagement was structured, the complications encountered, and three transferable lessons for businesses facing comparable multi-creditor situations in Ukrainian or similar CIS markets.
Client profile and the challenge
The client was the holding company – registered in an EU member state – of a mid-sized industrial group. The Ukrainian subsidiary accounted for the majority of the group's productive assets. Three creditors held outstanding claims: a domestic Ukrainian bank, a German equipment lessor, and a trade creditor based in Cyprus.
Each creditor had taken a different form of security. The domestic bank held a mortgage over the production facility. The German lessor retained title to machinery under a cross-border leasing agreement. The Cypriot trade creditor held a personal guarantee from the holding company's ultimate beneficial owner. None of the three creditors had agreed to a standstill. The domestic bank had already filed a petition to open insolvency proceedings under Ukrainian insolvency legislation.
The holding company engaged our team at a late stage – approximately six weeks after the bank's petition was filed. The window for influencing the procedural trajectory was narrow. For our team, experienced in advising on restructuring and insolvency matters in Ukraine, the first task was to assess whether rehabilitation proceedings remained available or whether liquidation had become the probable path.
Strategy: rehabilitation over liquidation
Ukrainian insolvency legislation distinguishes between rehabilitation proceedings – which allow a debtor to continue operating under a court-approved restructuring plan – and liquidation. The distinction matters commercially. Liquidation destroys going-concern value. Rehabilitation preserves it, provided the debtor can propose a credible plan and secure sufficient creditor support.
The assessment favoured rehabilitation for two reasons. First, the underlying business remained operationally viable. Revenue had declined but had not stopped. Second, the aggregate claim value across all three creditors was manageable relative to the asset base, provided the asset base was protected from piecemeal enforcement.
The strategy had three components. First, seek appointment of an administrator acceptable to the court and to the principal secured creditor. Second, convene a creditors meeting at the earliest opportunity to establish a unified procedural forum. Third, prepare a restructuring plan that differentiated treatment between secured and unsecured claims – acknowledging the German lessor's title retention rights outside the insolvency estate entirely.
The rationale for separating the lessor's position was important. Title retention under the leasing agreement was governed by German law. Under that regime, the lessor did not hold a claim against the insolvency estate – it held ownership of the equipment. Treating the lessor as a creditor inside the insolvency proceedings would have been both legally incorrect and commercially counterproductive. Recognising the lessor's rights outside the estate, and negotiating a lease continuation agreement directly, removed a potentially obstructive party from the creditors meeting dynamic.
For strategic context on managing creditor conflict in Ukrainian proceedings, our analysis of corporate disputes in Ukraine addresses the broader litigation and enforcement environment that shapes creditor behaviour in parallel proceedings.
Key milestones and complications
The administrator was appointed within three weeks of engagement. Coordination with the court registry was time-sensitive. Ukrainian procedural rules require the administrator to be nominated from a register of licensed insolvency practitioners. The selection criteria overlap with the secured creditor's preferences. Aligning those preferences in advance – without triggering an objection from the other creditors – required careful sequencing.
The first creditors meeting took place approximately five weeks after the administrator's appointment. Proof of debt submissions were filed by all three creditors within the statutory period. The Cypriot trade creditor's claim required additional documentary support. the underlying invoices had been issued in a currency other than the hryvnia. Additionally. Exchange rate adjustments had to be agreed before the proof of debt could be accepted in its amended form.
The most significant complication arose mid-process. The domestic bank, despite having supported the rehabilitation track initially, received internal instructions to accelerate recovery. This shifted its voting position at the creditors meeting. A restructuring plan requires approval by a defined majority of creditors by value. With the bank holding the largest single claim, its change of position threatened to block the plan entirely.
The response was to restructure the plan's economic terms rather than its legal architecture. The bank's concern was the repayment timeline – the original plan scheduled principal repayment over thirty-six months. Compressing the repayment schedule for the secured tranche to twenty-four months, funded by a partial asset disposal agreed with the holding company, restored the bank's support. The trade creditor accepted a modest haircut on its unsecured claim in exchange for accelerated partial payment. The restructuring plan was approved at the reconvened creditors meeting.
Comparable cross-border dynamics – where a CIS restructuring intersects with creditor enforcement positions taken under foreign law – are also examined in our related case study on corporate restructuring in Russia. This addresses analogous multi-creditor coordination challenges in a different CIS context.
To explore how a restructuring strategy can be built around your specific creditor composition in Ukraine, contact us at info@ferrazwhitmore.com.
Transferable lessons
Lesson 1: Identify which creditors fall outside the insolvency estate before the first creditors meeting. Title retention arrangements, operating leases, and certain secured interests may vest ownership rather than a claim. Treating such counterparties as ordinary creditors inflates the apparent claim pool, distorts voting dynamics, and can produce procedural objections that delay the entire process. Early legal mapping of each creditor's actual position under its governing law prevents this.
Lesson 2: The liquidator or administrator appointment is a strategic decision, not a formality. The administrator exercises significant influence over asset preservation. The timetable for creditor engagement. Additionally, the framing of the restructuring plan presented to the court. In Ukrainian insolvency proceedings, the administrator's relationship with the principal secured creditor is particularly consequential. Engaging before the appointment – not after – preserves meaningful influence over the outcome.
Lesson 3: Plan for creditor position changes between the initial filing and the creditors meeting vote. Institutional creditors in CIS markets are frequently subject to internal credit policy shifts that override earlier commercial positions. Building economic flexibility into the restructuring plan – rather than locking in terms at the earliest stage – allows for plan adjustment without restarting the procedural clock. In this matter, the ability to modify the repayment schedule without amending the plan's legal structure was the factor that preserved the rehabilitation track.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our insolvency and restructuring practice covers CIS markets including Ukraine, with direct experience in multi-creditor proceedings, administrator appointments, and cross-border enforcement of restructuring plans. As a law firm in Ukraine-related matters, we work with international holding companies, institutional investors. Additionally. In-house legal teams who need coordinated advice across the Ukrainian insolvency regime and the foreign law systems governing their creditors' positions. Our team combines Portuguese civil law expertise with English common law tradition to structure solutions that hold across multiple jurisdictions. To discuss a restructuring situation in Ukraine or a related CIS market, reach out to info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.