Practice versus theory. Insolvency statement

Lawyer, Head of Judicial Practice of NOBILI Law Firm Meshe Oleksiy


Practice versus theory. Insolvency statement



Proceedings in the case of insolvency of a natural person (natural person-entrepreneur) may be opened only at the request of the debtor.

An individual who believes that there are grounds for restoring his solvency may apply to the commercial court at the place of registration. An individual submits an application to the court to initiate proceedings, if there are appropriate grounds that indicate insolvency or its threat.

In the application the person must indicate the name of the commercial court, first name, first name, patronymic and contact details (registration number of the taxpayer’s account card, address of residence and (or) registration, means of communication and e-mail) , state the circumstances that became the basis for the appeal to the court (in each case they are different and individual) and indicate the list of documents attached to the application.

There are questions to the list of documents. A systematic analysis of the case law and our own experience of preparing such applications shows that the list of annexes declared in the Code may differ from the practical application. Based on my own experience, I can list the following:

  1. Receipt or payment order for advance payment to the deposit account of the court of remuneration to the restructuring manager for three months of performance of powers. The remuneration is 5 living wage for able-bodied people for each month.

In this case, an individual should take into account that if the procedure lasts more than 3 months, he will personally have to pay a fee, or pay it from the sale of property.

  1. Extract and / or Extract from the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Associations, confirming the presence (absence) of the status of a natural person – entrepreneur. If the debtor attaches an extract, it should be received closer to the filing date.
  2. Specified list of creditors and debtors. This list should include all contact and identification data of creditors (debtors), their addresses, the amount of debt, the availability of collateral (mortgage), the amount of partial repayment of debt and court decisions, if any.
  3. Own description of the property of a natural person belonging to the right of ownership and copies of documents confirming the right of ownership. Such documents may be contracts, certificates, acts and other documents, as their list depends on those title documents that were in force at the time of acquisition of ownership.
  4. List of property that is pledged (mortgaged) or is encumbered in another way. This list should include both movable and immovable property. Extract from the State Register of Encumbrances of Movable Property and Information from the State Register of Real Property Rights and the Register of Real Property Rights, the State Register of Mortgages, the Unified Register of Prohibitions on Alienation of Real Estate Objects should be added separately.
  5. Copies of documents on concluded agreements (transactions) concerning real estate, securities, shares in the authorized capital, vehicles belonging to an individual. Such contracts must be submitted if they were concluded during the year prior to the application and if they amount to 30 or more times the minimum wage.

If the applicant has not committed (within a year before the date of filing the application for the opening of insolvency proceedings) transactions in respect of real estate belonging to him, this should be stated in the application.

  1. Information on all available accounts (including deposit accounts) opened with banks and other financial institutions in Ukraine and abroad. Data on bank accounts must be obtained from the tax authority and from banks. The documents must indicate the balance of funds in such accounts. Also, an extract from such accounts for the last 3 years prior to the submission of the insolvency application is additionally provided.
  2. A copy of the employment record book. If there is no employment record book, it is worth mentioning this in the application.
  3. Information about the employer. If the debtor works under an employment contract, it is necessary to indicate all the identification data of the employer, his location. If the debtor is not in an employment relationship, this should be stated in the application.
  4. Declaration of property of the debtor in the case of insolvency. The declaration is submitted for the three years (for each year separately) preceding the submission of the application to the court. The declaration must contain information on the property, income and expenses of the individual and his family members in excess of 30 times the minimum wage.

If the debtor does not live with family members and does not know about their property, income and expenses, he should contact them with appropriate letters and request such information. If the data have not been provided, this is indicated in the declaration and copies of such correspondence are provided.

The declaration of the debtor’s property status in the case of insolvency must comply with the form approved by the Order of the Ministry of Justice of Ukraine dated 21.08.2019 for № 2627/5.

Such a declaration is submitted directly to the court as an appendix to the application.

Also, to confirm family relationships or their absence, the debtor should provide copies of court decisions (if any), divorce certificates, Extract from the State Register of Civil Status of Marriages to confirm the premarital name, etc.

  1. Certificate of no criminal record. Such a certificate should be obtained closer to the date of application.
  2. Power of attorney or other document. If the individual does not have a representative, such a document is not provided.
  3. A copy of the passport of a citizen of Ukraine. If the passport is in the form of an ID-card, you should add an Extract from the Unified State Demographic Register for registration of residence.
  4. A copy of the Registration number of the taxpayer’s account card. Such a document should be submitted even if it is specified in the ID-card.
  5. A copy of the Certificate of registration of residence (Annex 13). Such a certificate should be obtained closer to the date of application.
  6. Resolutions on opening enforcement proceedings and committing other enforcement actions. In the absence of such regulations, it is necessary to add printouts from the Register of Debtors and (or) the Automated System of Enforcement Proceedings. If there are no enforcement proceedings against the debtor, this should be noted in the application.
  7. Proposals for debt restructuring (draft debt restructuring plan). Such a plan should indicate the circumstances that caused the insolvency, information on the creditors ‘claims recognized by the court, information on the applicant’s property status, information on all income and income that the applicant expects to receive, the amount that will be allocated each month to repay creditors’ claims. repayment, as well as other information.
  8. Copies of documents confirming the circumstances that became the basis for the appeal to the court and were described in the application for the opening of insolvency proceedings.

In general, the preparation of a declaration of insolvency of an individual is individual and depends on certain circumstances, which is reflected accordingly in the annexes to it. The above list of applications is formed by me, based on the mandatory requirements of the Code of Ukraine on Bankruptcy Procedures, Judicial Practice and Personal Professional Experience in this category of cases.