Can the Bankruptcy Liquidation Procedure Be Terminated After the Main Debts Have Been Repaid?

In its judgment dated 7 July 2026 in case No. 926/3228/24, the Supreme Court determined the conditions under which bankruptcy proceedings may be closed after a debtor has been declared bankrupt and liquidation proceedings have been opened. In this case, the owner of the corporate rights repaid the claims of creditors in the first, third and fourth priority ranks, while only a fine and penalty interest in the sixth priority rank remained outstanding.

The Supreme Court noted that, pursuant to Part Seven of Article 41 of the Code of Ukraine on Bankruptcy Procedures, the debtor, the owner of its property or corporate rights may satisfy all claims of unsecured creditors, except for fines and penalty interest. Following such repayment, the relevant penalties are deemed extinguished by operation of law. This provision applies regardless of the type or origin of the fine or penalty interest, including where the creditor is a tax authority.

The Supreme Court also emphasized that, in order to close the proceedings, the debtor is not required to have sufficient assets to continue its business activities. The decisive factor is the status of its obligations to creditors. If the creditors' claims have been satisfied in accordance with the procedure established by law, the absence of assets in itself does not constitute grounds for continuing the liquidation proceedings. This approach may be applied at any stage of the proceedings, including after the debtor has been declared bankrupt.