Business Counterparty in Bankruptcy: How a Retailer Can File a Claim and Protect Its Interests

If bankruptcy proceedings have been opened against a supplier or customer, find the official notice, review the court order and gather the documents supporting the debt. For insolvency claims—those that arose before the proceedings were opened and are not secured by the debtor’s property—you must file a claim with the commercial court within 30 days of the official publication of the notice. A letter to the supplier, a reconciliation statement or talks with the insolvency officer do not replace filing a claim with the court.

Filing a claim lets you seek recognition of your claim and participate in the proceedings, but the amount recovered depends on the debtor’s assets and the order of payment. Missing the deadline does not mean that the entire debt is immediately lost: late claims may still be considered, but the creditor loses decisive voting rights, and funds already paid to other creditors are not returned. Do not write off the debt, set it off or terminate the contract solely because you have been told that your counterparty is experiencing financial difficulties.

Determine what has happened to the counterparty

A late payment, the opening of proceedings and a declaration of bankruptcy have different consequences. First establish the counterparty’s legal status from the court documents.

Opening a case does not yet mean that the enterprise must be liquidated. The court may proceed to rehabilitation — a procedure for restoring solvency through settlements under an approved plan — or close the proceedings on grounds provided for by the Code. For older procedures, check the transitional rules: cases that were at the rehabilitation stage when the Code was brought into operation on 21 October 2019 continue under the previous law until the transition to the next court procedure. Rehabilitation before the opening of proceedings, commenced before Law No. 3985-IX entered into force, is carried out under the previous version of the Code.

Check separately for notices of preventive restructuring. This procedure aims to prevent insolvency and has its own rules for creditor participation. Do not automatically apply to it the deadline and filing process used for claims after bankruptcy proceedings are opened.

Find the official notice and court decisions

Find the notice that proceedings have been opened on the official website of the judiciary of Ukraine. Check the debtor’s name and identification code against your contract. A similar business name is not sufficient grounds to file a claim.

Save the notice and the court order opening the proceedings. Record:

• the name of the commercial court and the case number;
• the date the proceedings were opened;
• the date the notice was officially published;
• the deadline for creditors to file claims;
• the name and contact details of the asset administrator;
• the date of the preliminary hearing and any restrictions imposed by the court.

The date the notice is officially published determines the deadline for filing insolvency claims. Do not count it from the day a manager learned of the case, received a letter from the counterparty or saw a news report.

Also check court decisions in the Unified State Register of Court Decisions. An appeal against a court order does not by itself suspend bankruptcy proceedings. Do not delay filing your claim because the debtor has said it will appeal.

Classify the debt as an insolvency, current or secured claim

The claim category depends on when it arose and whether it is secured. The invoice date, payment due date and date the claim arose may differ. Check all these details against the contract and supporting documents.

• Insolvency claims arose before the proceedings were opened and are not secured by a pledge over the debtor’s property. Article 45 of the Code of Ukraine on Bankruptcy Procedures sets a 30-day deadline for filing them.
• Current claims arose after the proceedings were opened. Until the debtor is declared bankrupt, disputes concerning them are heard in separate claim proceedings within the bankruptcy case. After official notice that the debtor has been declared bankrupt, the court considers current creditors’ claims within the liquidation procedure.
• Secured claims are backed by a pledge over the debtor’s property. Information about them and the pledged asset is recorded separately. Any unsecured portion, or a claim for which the creditor waives the security, must be filed with the court.

If the pledged asset is not worth enough to cover the whole debt, only the corresponding portion of the claim is secured. The remainder is unsecured. Do not rely only on the fact that a pledge agreement was once signed: check the asset, the scope of the security and the register information.

Claims must be stated in hryvnias. If the obligation is denominated in a foreign currency, Article 45 provides for conversion at the National Bank of Ukraine exchange rate on the date the creditor files the monetary claim.

Gather documents and calculate the claim amount

Ask your accountant to reconcile the transactions, your manager to collect delivery records and correspondence, and an authorized executive or representative to prepare and sign the claim. Assign one person to monitor the deadline, document delivery and court notices.

For a customer’s debt, prepare the contract, orders or specifications, delivery notes, acceptance records, proof that the goods were received and bank statements. For a claim against a supplier, include prepayment records, the agreed delivery dates and quantities, documents showing partial performance, and the grounds for demanding a refund.

• Match each delivery or prepayment to the relevant contract.
• Account for partial payments, returned goods and refunds.
• Check the opening debt balance and the documents that gave rise to it.
• Keep proof of delivery, goods acceptance and demands sent to the counterparty.
• Prepare a calculation showing dates, document numbers, transaction amounts and the remaining balance.

A reconciliation statement helps compare the parties’ accounts. Also attach the documents that show the basis of the debt, your performance of the relevant obligations and the amount claimed.

Example: prepayment for partially delivered goods

Illustrative example. The retailer transferred UAH 100,000 to a supplier. The supplier delivered goods worth UAH 30,000, as confirmed by a delivery note and acceptance documents. There were no other deliveries or refunds.

Unused prepayment: UAH 100,000 − UAH 30,000 = UAH 70,000. If the contract and law give rise to a monetary claim for repayment of this amount, the principal claim is UAH 70,000. The arithmetic balance alone is not enough: the claim must explain the legal basis for repayment and when the claim arose.

State fines and late-payment penalties separately from the principal debt. For each additional charge, give its legal basis, period and calculation. Take the moratorium into account: restrictions apply to penalties, inflation adjustments and annual interest on claims covered by it.

File the claim with the court handling the case

If proceedings have already been opened, file your monetary claim with the commercial court handling the case. Include the case number. Do not file a new application to open bankruptcy proceedings against the same debtor instead of filing your own claim.

The claim must include:

1. The court’s name, the case number and information about the judge.
2. Full details of the creditor and debtor: name, address and identification details; for an individual entrepreneur (FOP), the relevant status.
3. Whether the applicant has an electronic cabinet.
4. The amount claimed, with fines and late-payment penalties stated separately.
5. The circumstances giving rise to the debt, the legal grounds and the calculation.
6. Details of any pledged property securing the claim.
7. Information on whether the creditor is an interested party in relation to the debtor.
8. The relief sought from the court and a list of attachments.

Attach the debt records, proof of payment of the court fee and proof that copies of the claim were sent to the debtor and the asset administrator. If a representative is acting, prepare evidence of their authority. The creditor or an authorized representative must sign the claim.

Court fee: distinguish between two types of applications

For an ordinary creditor’s monetary claim filed after the official notice, the fee is 2 subsistence minimums for able-bodied persons. The same fee applies to the relevant claim filed after notice that the debtor has been declared bankrupt. The basis is the subsistence minimum set on 1 January of the year in which the claim is filed.

The fee of 10 subsistence minimums applies to a creditor’s application to open bankruptcy proceedings. A different fee applies to a property claim within the proceedings: 1.5% of the claim value, but not less than one and not more than 350 subsistence minimums for able-bodied persons.

A coefficient of 0.8 applies when procedural documents specified by law are filed electronically. So the calculation for an electronic monetary claim is: 2 × subsistence minimum × 0.8. File the electronic document through the court information system with a qualified electronic signature. Check the correct court’s payment details before paying.

An exemption or deferral of the fee requires a legal basis. Business status or financial difficulties alone do not exempt you from payment. If you qualify under Article 5 or 8 of the Law of Ukraine “On Court Fee,” state the basis and attach supporting evidence.

How to send copies of documents

Electronic copies may be sent to participants’ electronic cabinets through the court information system. If a participant has no cabinet, or there is no information about one, copies are sent in paper form by mail with an inventory of enclosures. Keep the inventory, postal receipt or system confirmation of electronic delivery.

Article 42 of the Commercial Procedure Code provides an exception: a person filing documents through an electronic cabinet is exempt from sending copies to a participant who is required to register a cabinet but has not done so. Apply this exception only after establishing that these conditions are met. If the retailer operates as a legal entity registered under Ukrainian law, it must have its own electronic cabinet. Representation by a lawyer does not remove this obligation. Registration is voluntary for an individual entrepreneur (FOP), unless they belong to another category required to register. Failure to meet a registration obligation may result in a written claim being returned without consideration.

Monitor acceptance of the claim and recognition of your claims

After filing, save the confirmation and check court notices. If the court leaves the claim pending until its defects are corrected, remedy those defects within the time set by the court. Under Article 46, that period may not exceed five days from service of the order. If you remedy the defects on time, the original filing date is preserved.

The asset administrator reviews claims and reports whether they are recognized or rejected. The court makes the final decision. After the hearing, check the recognized principal amount, separate recording of penalties, the payment priority and voting rights in the register of creditors’ claims.

If your claim is rejected in whole or in part, check the appeal procedure for the specific order. Decisions on individual claims at the preliminary hearing cannot be appealed separately from the order issued following that hearing.

What to do if the 30 days have passed

File your claim without further delay. Late insolvency claims are considered after the preliminary hearing in the order received. They are paid according to the priority set by the Code, but the creditor has no decisive voting rights at creditors’ meetings or on the creditors’ committee.

All procedural steps already taken are binding on that creditor as well. If other creditors have already been paid, your late claim does not require those payments to be returned. If the case is closed, check the grounds and the wording of the order. Part four of Article 90 provides that, in the cases specified in points 5–8 of part one of that article, the court states that insolvency claims not filed within the period set by the Code or rejected by the court are extinguished, and declares the corresponding enforcement documents unenforceable. These grounds include restored solvency or payment of all claims in the register, approval of the rehabilitation manager’s or liquidator’s report, and the absence of claims after publication of a notice in a case opened on the debtor’s application.

Take the moratorium and debt recovery rules into account

Under Article 41, a moratorium takes effect at the same time as bankruptcy proceedings are opened against a legal entity. It suspends performance of monetary obligations covered by it whose due dates fell before its introduction, and limits compulsory recovery. A court judgment or enforcement document already obtained does not allow you to bypass the procedure.

During the moratorium, fines and late-payment penalties are not charged on covered claims, inflation adjustments and three per cent annual interest are not applied, and the limitation period is suspended. Suspension of the limitation period does not replace filing insolvency claims within the 30-day period.

The moratorium has exceptions. In particular, it does not apply to current claims, payments to employees specified by the Code, alimony, authors’ remuneration, or claims for harm to life and health. Article 41 also provides exceptions for certain stages of enforcement proceedings and judgments concerning non-property matters. However, as a general rule, even enforcement against property for a claim not covered by the moratorium requires an order from the court handling the case.

Special rules apply to pledged property. After 170 calendar days from the introduction of asset administration, the moratorium on secured claims may end automatically if the court has not declared the debtor bankrupt, introduced rehabilitation or extended the relevant moratorium. Check all court decisions in the case before taking any enforcement action.

Under Article 7, property disputes with the debtor are heard by the commercial court within the bankruptcy case. If a claim to recover the same amount and a monetary claim in the bankruptcy case have both been filed, the court leaves the ordinary claim without consideration. Coordinate procedural steps to avoid duplicate filings.

Check mutual debts, goods received and new deliveries

If you received goods from a supplier, the opening of proceedings against the supplier does not cancel your obligation to pay for them. In liquidation, the liquidator may recover debts owed to the bankrupt, including debts owed by your store. Check the amount, due date, the recipient’s authority and payment details.

If the supplier also owes you a prepayment for other goods, do not reduce your payment on your own. General set-off rules are in Articles 601–602 of the Civil Code, and part five of Article 64 of the Code of Ukraine on Bankruptcy Procedures requires the consent of the creditor or creditors and that the property rights of other creditors are not infringed. You must also take the stage of the case and the moratorium into account.

Compare reciprocal claims by party, subject matter, due dates and supporting documents. Establish that set-off is permitted within the procedure and document it properly. Changing the balance in accounting software does not by itself extinguish obligations.

Agree to new deliveries or prepayments only after assessing the risk that the money will not be returned. For an existing contract, check the grounds for amendment, suspension of performance or termination. Unilateral termination is allowed if the contract or law provides for it; otherwise, the parties’ consent or a relevant court decision is required. Keep a record of the notice and the date it was sent.

Do not take goods already transferred to the counterparty on your own. If property belongs to you and is held by the counterparty for storage or under another contractual arrangement, prepare proof of ownership and determine the proper way to demand its return.

How a creditor can influence the proceedings

Once your claims are recognized, monitor notices of creditors’ meetings. These meetings consider the rehabilitation plan, elect the creditors’ committee and decide whether to move to the next procedure. The number of votes depends on recognized claims; fines, late-payment penalties and other amounts specified by the Code are excluded from the vote calculation.

Filing on time does not always give you decisive voting rights. In particular, insolvency creditors who are interested parties in relation to the debtor do not have decisive voting rights. Creditors subject to sanctions under the Code that block assets also face participation restrictions.

A creditor may obtain information about other creditors’ claims and file objections. If you know of transactions that may have infringed the rights of the debtor or creditors, provide the documents to the insolvency practitioner and consider applying to the court. On specified grounds, Article 42 allows challenges to transactions entered into after proceedings were opened or during the three years before they were opened.

During liquidation, monitor the search for and sale of assets, collection of debts owed to the bankrupt and distributions. You may challenge a liquidator’s actions or inaction that infringe your rights in court. If the statutory grounds are met, the liquidator or a creditor may seek subsidiary liability for persons responsible for bringing about the bankruptcy. Recovered funds go into the liquidation estate and are distributed according to priority.

Payment priority for a retailer

For a legal entity, an ordinary unsecured debt for goods or repayment of a prepayment falls into the fourth priority class. Fines and late-payment penalties are recorded separately in the sixth priority class; they may be paid in the case only during liquidation.

Secured claims are paid out of the secured asset ahead of other claims, under the rules of the Code. However, liquidation also involves payment of the insolvency practitioner’s expenses and remuneration and other special payments. Additional rules may apply to certain debtor and claim categories, so the expected recovery cannot be determined by priority number alone.

Each subsequent class is paid only after the previous one has been paid in full, subject to exceptions set by the Code. If there is not enough money to pay a class in full, the funds are distributed proportionally among the creditors in that class.

Illustrative example. UAH 200,000 remains for the fourth class, whose claims total UAH 1,000,000. The retailer’s claim is UAH 70,000. A proportional distribution would give the retailer UAH 200,000 × UAH 70,000 ÷ UAH 1,000,000 = UAH 14,000. This calculation applies to the stated assumptions and is not a forecast for a particular case.

Under Article 64, claims left unpaid because of insufficient assets are deemed extinguished. For accounting purposes, keep documents showing amounts received, the unpaid balance and the conclusion of the procedure.

If the debtor is an individual entrepreneur (FOP) or a bank

Insolvency of an individual, including an individual entrepreneur (FOP), is governed by a separate book of the Code. Such proceedings may be opened only on the debtor’s application. A retailer that is a creditor cannot initiate them under the rules for bankruptcy of a legal entity.

In already-opened insolvency proceedings concerning an individual or individual entrepreneur (FOP), file an insolvency claim with the commercial court handling the case within 30 days of the official publication of the notice. Under Article 122, the restructuring manager reviews claims. Send copies of the claim and attachments to the debtor and restructuring manager in accordance with the rules for electronic delivery, and include proof in your filing. After the assets are sold, procedure costs are reimbursed before payments to creditors. Ordinary unsecured trade claims fall into the second priority class under Article 133.

Where assets are insufficient, claims may be deemed discharged, and upon completion of the procedure the court decides whether to release the individual from debts. The Code preserves exceptions for alimony, specified claims for damages, and other obligations of a personal nature. Part seven of Article 133 also allows unsatisfied or partially satisfied claims for payment of mandatory state pension and other social insurance contributions to be asserted after the proceedings are completed.

A different special regime applies to an insolvent bank. Do not use these instructions as the process for filing claims against a bank, and do not set off claims without checking the special rules: Article 602 of the Civil Code separately restricts set-off in relation to the obligations of an insolvent bank.

Wartime provisions: what creditors should consider

Point 1-6 of the Final and Transitional Provisions of the Code establishes special rules for the period of martial law and the six months after it ends or is lifted. These include remote creditors’ meetings and polling, the court’s ability to extend the periods for certain bankruptcy procedures, and rules for carrying out approved rehabilitation and restructuring plans.

The extension of procedural periods provided for by this point is not a general extension of the 30-day deadline for filing insolvency claims. File under Article 45 on time, even if the preliminary hearing or liquidation has been postponed.

If you are planning to initiate bankruptcy proceedings against a legal entity, consider the special grounds for refusing to open a case. In particular, the debtor may prove that it has the status specified by the Code of a contractor under a current defense contract, or that the failure to meet its obligations is connected with armed aggression. Separate prohibitions and grounds for closing proceedings apply to certain state-owned enterprises and companies. Check these restrictions before incurring the costs of initiating the procedure.

Bankruptcy and writing off a debt for tax accounting

The opening of proceedings, a declaration of bankruptcy, a claim being extinguished because of insufficient assets, and recording a transaction for tax purposes are separate legal and accounting events. An order opening proceedings does not confirm that the counterparty has already been declared bankrupt.

Subparagraph 14.1.11 of the Tax Code lists among the indicators of bad debt indebtedness of business entities declared bankrupt in accordance with the law or terminated as legal entities through liquidation. It separately provides for an indicator based on non-payment due to insufficient assets under specified conditions for compulsory recovery.

Give your accountant the court decisions, debt documents and calculation of amounts recovered and outstanding. The basis and treatment must be determined according to your tax and accounting system. Classifying a debt as bad does not establish a universal tax reduction amount. If you are a single-tax payer, do not automatically apply a write-off process or tax treatment intended for another system.

Reconcile a counterparty’s debt in Торгсофт

In Торгсофт, open «Оплата → Баланс з партнерами», select the partnership type and the relevant counterparty. Set the period, currency, business and accounting center. Use «Картку взаєморозрахунків» to review the opening and closing debt balances and transaction history. Customer balances are kept in the national currency, while supplier balances are kept in the currencies of deliveries.

To compare against source documents, open «Розшифровку балансу з партнерами»: it shows invoices, their payments, goods and payments not linked to invoices. If needed, print a reconciliation statement or settlement report. Check the filters, display of automatic transactions and access to accounting centers: role restrictions may affect the opening debt balance shown. See the instructions for checking settlements.

Use this data to find discrepancies and prepare a calculation. For a court claim, gather contracts, delivery notes, statements and other evidence supporting your claims. A software report does not determine the legal category of a debt, whether set-off is permitted or the basis for a tax write-off. Prepare the court claim and accounting decisions separately.

What to check before closing out a debt

• The court decision correctly identifies the creditor, claim amount and priority class.
• The recognized claims have been entered in the creditors’ register.
• All actual payments have been reconciled with bank records and the accounts.
• The unpaid balance is supported by the documents from the proceedings.
• You have received a court decision concluding the relevant procedure or closing the case.
• The accountant has determined how to record the debt under your tax system.
• Documents, correspondence and proof of filing have been kept together.

Official sources

• Code of Ukraine on Bankruptcy Procedures No. 2597-VIII: Articles 1, 7–9, 39, 41–42, 45–49, 58, 60–61, 64, 90, 113, 115, 122, 133–134; points 1-6 and 1-9 of the Final and Transitional Provisions.
• Law of Ukraine “On Court Fee” No. 3674-VI: Article 4, including point 2-1 of part two and part three; Articles 5 and 8.
• Commercial Procedure Code of Ukraine No. 1798-XII: Articles 42, 56, 162, 164, 170.
• Civil Code of Ukraine No. 435-IV: Articles 601–602, 610, 612, 615, 625, 651.
• Tax Code of Ukraine No. 2755-VI: subparagraph 14.1.11 of paragraph 14.1 of Article 14.
• Official website of the judiciary of Ukraine: notices in bankruptcy cases.
• Unified State Register of Court Decisions: orders and judgments in a specific case.