A multinational group with a Ukrainian operating subsidiary faces a hard reality: assets are on the ground in Ukraine, creditors are circling. Additionally. The parent board in Frankfurt or London is receiving conflicting advice about what Ukrainian insolvency proceedings actually involve. Delay is not a neutral choice. Under Ukrainian insolvency legislation, a debtor that misses the window for voluntary restructuring may find itself pushed directly into liquidation proceedings. with an arbytrazhny keruyuchiy (insolvency administrator) controlling the assets before the parent group has coordinated its position.
Corporate restructuring in Ukraine is governed by insolvency legislation that provides two primary court-supervised paths: a rehabilitation procedure aimed at restoring solvency, and a liquidation procedure leading to orderly wind-down. The debtor, or qualifying creditors, must file with the relevant commercial court, which then opens proceedings and appoints an administrator. The entire court-supervised rehabilitation phase typically spans from several months to approximately one year, depending on creditor complexity and asset position.
This guide covers the procedural steps, documentary requirements, cost ranges, common errors made by foreign groups, and the decision framework for choosing among available restructuring options in Ukraine.
The restructuring landscape under Ukrainian insolvency law
Ukrainian insolvency legislation provides three primary routes for a financially distressed entity. Each route has distinct eligibility conditions, timelines, and strategic implications for international groups.
The first route is out-of-court restructuring. This involves a negotiated agreement between the debtor and its creditors without court involvement. It is fastest and least disruptive. It is available only if the creditor base is manageable and no creditor insists on formal proceedings. Ukrainian commercial legislation recognises restructuring agreements reached outside court, but their enforceability depends on unanimous or near-unanimous creditor consent. A single dissenting creditor with a material claim can frustrate the process entirely.
The second route is court-supervised rehabilitation, known in Ukrainian legal practice as sanatsiya (rehabilitation procedure). Under this procedure, the commercial court opens insolvency proceedings and appoints an administrator. The debtor continues operating. A restructuring plan is prepared, put to a creditors meeting, and submitted for court confirmation. This route protects the debtor from enforcement actions during the procedure. It is the central tool for international groups that need time to reorganise liabilities while preserving operational continuity.
The third route is liquidation. The likvidator (liquidator) takes control of assets, conducts an inventory, satisfies creditor claims in the statutory order of priority, and dissolves the entity. For international groups, liquidation destroys ongoing commercial relationships and triggers cross-border tax and liability consequences. It should be the last resort – not a default outcome reached because the group moved too slowly on restructuring.
The commercial courts of Ukraine – hospodarsky sudy (commercial courts) – have exclusive jurisdiction over insolvency proceedings. Cases are filed at the court of the debtor's registered location. Jurisdiction cannot be contracted around. Foreign creditors who assume they can initiate proceedings in their home courts and have those proceedings recognised in Ukraine will encounter a system that does not automatically extend recognition to foreign insolvency orders affecting Ukrainian legal entities and assets.
Step-by-step procedural timeline for rehabilitation
Understanding the sequence is essential. Each stage has a defined function, and errors at early stages create compounding problems later.
Step 1 – Pre-filing preparation (two to four weeks). The debtor conducts an internal financial assessment. The group maps all liabilities: secured creditors, unsecured trade creditors, tax authorities, and employee claims. A preliminary restructuring plan concept is drafted. Critically, the group must identify which creditors hold Ukrainian law-governed claims and which hold foreign-law claims. The interaction between these two categories will shape the entire creditor strategy.
Step 2 – Filing the application (one week). The debtor files an application with the competent commercial court. The application must be accompanied by financial statements, a list of all creditors with claim amounts, a statement of assets, and evidence of the debtor's inability to satisfy all claims as they fall due. Incomplete filings cause delays. Courts in Ukraine have returned applications for missing creditor schedules, which can cost three to four weeks of additional exposure.
Step 3 – Court hearing and opening of proceedings (two to four weeks after filing). The court examines the application at an initial hearing. If the insolvency threshold is met, the court opens proceedings and appoints an administrator. From this moment, enforcement actions against the debtor are stayed. This automatic stay is one of the most significant protections available under Ukrainian insolvency legislation.
Step 4 – Administrator appointment and asset review (four to eight weeks). The administrator – who operates in a supervisory role during rehabilitation. Distinct from the role of a liquidator in wind-down – reviews the debtor's financial position, verifies asset ownership. Additionally, publishes a notice in the official state gazette inviting creditors to submit their proof of debt. Each creditor must submit a formal proof of debt within thirty days of publication. Creditors who miss this deadline face exclusion from the creditors meeting and from distributions under the restructuring plan.
Step 5 – Creditors meeting and plan approval (four to twelve weeks). The administrator convenes a creditors meeting once the proof of debt submission period closes. At the meeting, creditors vote on the proposed restructuring plan. The plan must achieve the required majority by value of admitted claims. Secured creditors and unsecured creditors typically vote as separate classes. A plan approved at the creditors meeting is submitted to the court for confirmation.
Step 6 – Court confirmation and plan implementation (two to four weeks for confirmation; plan implementation period varies). The court reviews the plan for procedural compliance and substantive fairness. Once confirmed, the plan binds all creditors who submitted a proof of debt – including those who voted against it. Implementation timelines are set in the plan itself. They typically run from one to three years for complex group restructurings.
For international groups with cross-border creditor structures. Engaging a lawyer in Ukraine with insolvency experience at the outset of Step 1. not after the court application is filed. is the single most effective way to prevent procedural errors that cannot easily be corrected later. For a full overview of the firm's restructuring support in Ukraine, see our dedicated insolvency and restructuring services in Ukraine.
Documentary checklist and common errors by foreign clients
A court application that is procedurally deficient will be returned. More damaging, a restructuring plan that lacks proper documentary support may be rejected at the court confirmation stage – after months of creditor negotiations have already been completed.
The core documents required for filing and plan submission include:
- Audited or verified financial statements for the preceding two to three financial years
- A complete schedule of creditors with claim amounts, currency, and governing law
- A register of assets, including encumbrances, pledges, and liens under Ukrainian security legislation
- The proposed restructuring plan, with financial projections and creditor recovery analysis
- Corporate authority documents: board resolutions authorising the filing, and evidence of signatory authority
Foreign groups make several recurring errors. The first is treating Ukrainian financial statements as a formality. Ukrainian accounting standards differ from IFRS in material respects. Courts and administrators will scrutinise local-form statements. Submitting only consolidated IFRS group accounts, without Ukrainian statutory accounts for the local entity, is a common cause of application delay.
The second error is failing to coordinate foreign-law creditors before filing. A foreign bank holding a Ukrainian-law pledge over local assets occupies a different procedural position from a foreign trade creditor holding a claim under English law. The administrator must be given a clear map of this structure at the outset. Groups that provide incomplete creditor schedules find that creditors not listed in the initial filing claim they were not properly notified – generating disputes that delay plan confirmation.
The third error is underestimating the role of the tax authorities as a creditor. Tax authorities in Ukraine hold a privileged position in the creditor hierarchy under insolvency legislation. A restructuring plan that does not specifically address outstanding tax liabilities, including penalties accrued during the distress period, will face objections from the tax authority at the creditors meeting. Practitioners in Ukraine consistently note that tax authority approval. or at minimum, the absence of tax authority opposition – is a practical prerequisite for plan confirmation, even when the statutory voting threshold is otherwise met.
Groups facing parallel corporate disputes alongside financial distress should also note that the two sets of proceedings interact. A contested shareholder dispute can affect the validity of corporate resolutions authorising the restructuring filing itself. For matters where both financial and governance disputes are active, our analysis of corporate disputes in Ukraine sets out the relevant procedural intersections.
Decision framework: which path suits your scenario
The right restructuring path depends on four variables: the composition of the creditor base, the extent of operational assets remaining in Ukraine. The group's medium-term commercial intentions for the Ukrainian market. Additionally, the severity of the financial shortfall relative to asset values.
Scenario A – Temporary liquidity stress, viable business, cooperative creditors. Out-of-court restructuring is the appropriate path. It preserves confidentiality, avoids the public notice obligations triggered by court proceedings, and can be completed in weeks rather than months. It is available only if all material creditors are prepared to negotiate. A single creditor holding a secured claim over Ukrainian assets who declines to participate can force the group into formal proceedings by filing its own insolvency application.
Scenario B – Structural insolvency, ongoing operations, diversified creditor base. Court-supervised rehabilitation (sanatsiya) is the appropriate instrument. The automatic stay stops enforcement actions immediately. The administrator provides credibility to the process. The plan, once confirmed, binds dissenters. This path is suited to groups that have a credible business case for continued Ukrainian operations but cannot service current liabilities on their existing terms.
Scenario C – No viable business case for continued operations, orderly exit required. Voluntary liquidation. Initiated by shareholder resolution before creditors file their own application, gives the group greater control over the process and the choice of liquidator. Involuntary liquidation – triggered by a creditor application – places the liquidator appointment partly outside the debtor's control and accelerates the timeline in ways that can disadvantage the group.
Scenario D – Mixed-jurisdiction group with Ukrainian subsidiary and assets in multiple countries. This is the most complex scenario. The Ukrainian insolvency proceedings will control Ukrainian assets. Assets held in other jurisdictions are subject to those jurisdictions' laws. International groups often attempt to manage this through parallel proceedings or through holding-company restructurings at the parent level. Such strategies require careful coordination between Ukrainian insolvency counsel and counsel in each relevant jurisdiction. Acting on advice obtained in one jurisdiction without verifying its compatibility with Ukrainian insolvency legislation is a documented source of costly errors.
Cost ranges vary significantly by scenario. Out-of-court restructuring for a straightforward creditor base involves legal fees starting from the low tens of thousands of euros equivalent, plus any negotiated debt adjustments. Court-supervised rehabilitation involves court filing fees, administrator fees set by reference to asset values, and legal fees that scale with the number of creditor classes and plan complexity. Groups should budget for the process to cost materially more than the equivalent out-of-court route – but weigh this against the enforceability benefit that court confirmation provides.
For comparison with restructuring procedures in a neighbouring civil law jurisdiction, our guide to corporate restructuring in Russia sets out a parallel procedural analysis.
To receive an expert assessment of your group's restructuring options in Ukraine, contact us at info@ferrazwhitmore.com.
Self-assessment checklist before initiating proceedings
Court-supervised rehabilitation in Ukraine is appropriate if the following conditions are met:
- The Ukrainian entity is insolvent or imminently insolvent: it cannot satisfy liabilities as they fall due
- The business retains operational viability: assets generate revenue or have realisable value that supports a creditor recovery plan
- A creditor recovery analysis shows that creditors recover more under the rehabilitation plan than under liquidation
- The group has sufficient management capacity to cooperate with the administrator during the procedure
Before filing, verify the following critical items:
- Ukrainian statutory financial statements are prepared and accurate for the preceding financial years
- All creditors have been identified, including off-balance-sheet contingent claims and inter-company liabilities
- Tax liabilities – including penalties – have been calculated and a tax creditor strategy is in place
- All corporate authorisation documents are in order: the filing must be authorised by a validly constituted board or equivalent governing body
- Foreign-law creditors have been notified of the intended filing and their procedural rights in Ukrainian insolvency proceedings have been explained to them
Groups that cannot confirm all five items on the second checklist should complete that preparation before filing. A premature filing with incomplete documentation extends the timeline and weakens the group's negotiating position with creditors at the plan approval stage.
Frequently asked questions
Q: How long does a formal restructuring procedure take in Ukraine?
A: The court-supervised restructuring phase in Ukraine typically runs from several months to just over one year, depending on the complexity of the creditor base and the debtor's cooperation. The initial court hearing to open proceedings usually occurs within a few weeks of filing. Contested creditor claims and multi-jurisdictional asset positions extend the timeline materially.
Q: Can a foreign parent company initiate restructuring of its Ukrainian subsidiary?
A: A foreign parent does not file directly on behalf of a Ukrainian subsidiary. The application must be submitted by the Ukrainian legal entity itself, or by qualifying creditors under insolvency legislation. The parent can exercise influence through shareholder resolutions, cross-border contractual arrangements, and coordinated creditor strategies – but the procedural actor in Ukrainian courts is the local entity.
Q: Is a restructuring plan binding on dissenting creditors in Ukraine?
A: A misconception held by many foreign clients is that a minority of dissenting creditors can block a restructuring plan outright. Under Ukrainian insolvency legislation, a plan approved by the required majority at a creditors meeting and confirmed by the court becomes binding on all creditors who submitted a proof of debt, including dissenters. However, creditors may challenge the plan before court confirmation on procedural or substantive grounds.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our team combines Portuguese civil law expertise with English common law tradition to deliver cross-border legal solutions in insolvency and corporate restructuring, including court-supervised rehabilitation and out-of-court creditor negotiations in Ukraine. We work with international entrepreneurs, institutional investors, and in-house legal teams who need results-oriented counsel across multiple legal systems. As an international law firm in Ukraine-related matters, the firm advises groups on coordinating Ukrainian insolvency proceedings with parallel restructuring strategies in other jurisdictions. Our restructuring practice covers high-growth and emerging markets across the CIS region, supported by practitioners with experience before commercial courts in civil law systems. To discuss your situation, contact us at 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.