On the path towards European standards: The Supreme Court on the first results of implementing preventive restructuring

Oleh Vaskovskyi, Secretary of the Judicial Chamber for Bankruptcy Cases of the Commercial Cassation Court within the Supreme Court, took part in the expert discussion “On the Path Towards European Standards: Implementation of EU Directive 2019/1023”, dedicated to the practical aspects of introducing preventive restructuring procedures in Ukraine. The event also brought together Members of Parliament of Ukraine, insolvency practitioners, experts, representatives of the Independent Association of Banks of Ukraine, business associations, lawyers, and academics.

The discussion focused on several key issues: the introduction of European approaches to preventive restructuring; major challenges in applying the Law of Ukraine of 19 September 2024 No. 3985-IX “On Amendments to the Code of Ukraine on Bankruptcy Procedures and Certain Other Legislative Acts of Ukraine Regarding the Implementation of Directive (EU) 2019/1023 of the European Parliament and of the Council and the Introduction of Preventive Restructuring Procedures”; recommendations for improving legislation and judicial practice; and the participation and role of businesses, insolvency practitioners, and courts in the new procedure.

The event aimed to foster dialogue among key stakeholders and to develop practical proposals for the effective implementation of European standards in the field of preventive restructuring.

Oleh Vaskovskyi presented an overview of the first results of applying the new chapter of the Code of Ukraine on Bankruptcy Procedures. He noted that during the ten months since the provisions on preventive restructuring came into force, according to the Unified State Register of Court Decisions, five preventive restructuring proceedings have been initiated in the courts, one of which has already been concluded with the adoption of a restructuring plan approved by creditors in the Kharkiv region. This marks a gradual shift from theory to practice and the beginning of the formation of domestic judicial practice in the field of preventive restructuring.

In his address, the Secretary of the specialised judicial chamber of the Commercial Cassation Court noted that a complex and lengthy process is currently under way to adapt the provisions of the EU Directive to Ukrainian economic realities. In his view, it is important not only to implement European standards but also to assess their effectiveness within the national context. The judge drew attention to the fact that the preventive restructuring procedure includes safeguards against abuse and delay. Therefore, cassation appeals are allowed only in three cases: approval or refusal to approve a restructuring plan, and closure of proceedings. All other matters that may arise will be considered at the appellate level.  According to him, this approach will contribute to the speed and stability of the process.

The speaker also drew a parallel between preventive restructuring and the former settlement (amicable agreement) procedure, noting that both are united by the pursuit of a balance between the interests of the debtor and the creditors. Oleh Vaskovskyi emphasised that despite its pre-trial nature, the procedure is, in essence, a form of bankruptcy. He cautioned against using the procedure for purposes other than its intended one - namely, to evade obligations or to allow a debtor to continue operations without genuine restoration of solvency. “The key,” the judge noted, “is to prevent the misuse of procedures for unintended purposes, as their goal is to ensure the swiftest possible satisfaction of creditors’ interests while preserving the debtor’s viability”. In his opinion, the further development of judicial practice should be accompanied by an analysis of the first cases and the improvement of regulatory frameworks, so that preventive restructuring procedures are effectively integrated into Ukraine’s economic reality.

The event was organised by the Safe Ukraine 2030 Foundation in cooperation with the EU Project Pravo-Justice and Expertise France, as part of an initiative aimed at raising professional awareness of preventive restructuring and aligning Ukrainian legislation with EU standards.

Photo courtesy of the organisers.