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The Court of Cassation (Commercial Division) has adopted a legal position in case No. 913/355/21, which is significant in the context of a liquidation procedure involving a debtor whose property is located in a temporarily occupied territory of Ukraine during martial law, writes Vadym Kizlenko, Counsel, Co-Head of Insolvency and Financial Restructuring, Attorney at Law, Insolvency Receiver, Ilyashev & Partners Law Firm.

In this case, the liquidator filed a motion to close the bankruptcy proceedings due to the impossibility of completing the liquidation procedure. The liquidator argued that the debtor’s only property complex is situated in a temporarily occupied territory, to which there is no access, thus the assets cannot be sold. Other property of the debtor is also unavailable.

The court of first instance and the court of appeal rejected the motion, referring to the absence of an exhaustive list of grounds for terminating bankruptcy proceedings.

However, the Court of Cassation took a different view. Its key argument was based on Article 90(1) of the Code of Bankruptcy Procedures, which allows for the termination of proceedings where other circumstances arise that make further consideration of the case impossible.

According to the Court of Cassation, the lack of access to the debtor’s property located in the occupied territory may constitute such a circumstance.

The Court of Cassation further emphasised the need to determine whether the liquidator had taken all reasonable steps to identify, access, or replace the property – including efforts to locate other assets, assess the possibility of selling part of the property, or restore access to the affected assets.

The Court’s conclusion also reflected current legislative restrictions on enforcement and other procedural actions concerning property located in temporarily occupied territories or combat zones. This means that further continuation of bankruptcy proceedings would not only be meaningless in legal terms but would also conflict with the principle of procedural economy.

Under the exceptional conditions of wartime, courts may recognise the impossibility of completing a liquidation procedure as sufficient grounds for closing a bankruptcy case.

The legal position expressed by the Court of Cassation underscores the judiciary’s role in addressing legislative gaps and adapting the application of the Code of Bankruptcy Procedures to the realities of martial law.

Working with our Country Coordinators, we are continuing with our programme to develop a close relationship with the relevant National Association (or similar body) in each jurisdiction covered by our members. With these agreements, we hope to increase the flow of information between the bodies, and work together on future events (such as a recent seminar with CEDI and a planned event with Reseau Cap in Brussels).

We are very happy to report that we now have a total of 14 agreements, with more in the pipeline.

A full list is shown below and on our website here.

• Belgium – Reseau CAP
• Croatia – Husu
• Denmark - Danske Insolvensadvokater
• France - CNAJMJ
• Germany – Distressed Ladies Association
• Germany - NIVD
• Hungary - RFE
• Ireland – Restructuring & Insolvency Ireland
• Italy – Consiglio Nazionale dei Dottori Commercialisti e Degli Esperti Contabili
• France – L’Association pour le Retournement des Entreprises
• Netherlands – INSOLAD
• Portugal - APDIR
• Romania – UNPIR Cluj Branch
• Spain - CEDI

A comprehensive Bulgarian close-out netting law was promulgated on 15 August 2025. It is structured as an amendment and supplement to the Financial Collateral Arrangements Act (the “Amendment”), which transposed the EU Financial Collateral Directive 2002/47/EC (the “FCD”) in Bulgaria. To reflect its broader scope, the title of the act was also changed to the “Financial Collateral and Close-out Netting Arrangements Act” (the “Act”).

The structural approach of the Amendment introduces a new close-out netting regime, building on the well-established financial collateral concepts that have been applied and court-tested in Bulgaria for over 18 years. Furthermore, to define the scope of the new regime, the Amendment refers to the terminology according to the domestic transposition of the EU MiFID Directive 2014/65/EU (the “MiFID”), while the new general conflict-of-law netting rule follows the wording under Article 25 of the EU Winding-up Directive 2001/24/EC (the “WUD”) as transposed in Bulgaria. Such reliance on established concepts will hopefully facilitate the practical application of the Amendment.

Read the whole story here by Tsvetan Krumov (Partner, Schoenherr, Bulgaria; Senior Assistant Professor in Private International Law, Law and State Institute, Bulgarian Academy of Sciences; Co-Chairman, EBRD Working Group on the Bulgarian close-out netting law.)