Successful Completion of a Complex LLC Liquidation Despite Active Resistance from the Former Director

A voluntary liquidation usually proceeds without disputes: the shareholder adopts a resolution, the liquidator settles with creditors, completes the tax audit, and files with the state registrar. In this case, the company's former director spent nearly three years obstructing the procedure.

Introduction

The client of Disputes Law Firm is a Chinese metallurgy and industrial construction corporation headquartered in Chongqing, the sole shareholder of a Ukrainian subsidiary registered in the Odesa Region in 2016. In 2022, the parent corporation decided to close several of its foreign subsidiaries, including the Ukrainian one, and instructed the firm to carry out a full liquidation of the company.

The company's former director, a Chinese national, refused to hand over the corporate seals, constitutional documents, and accounting records to the liquidator. Together with his wife, he then filed creditor claims against the company totaling more than UAH 2.7 million, two petitions to open bankruptcy proceedings, two employment lawsuits, and a counterclaim for UAH 486,574.07, and obtained a temporary court order barring registration of the company's dissolution.

On August 4, 2026, the state registrar entered the company's dissolution by liquidation into the Unified State Register. By that date, both bankruptcy petitions had been rejected, both employment cases had been closed without any recovery against the company, the court order barring registration had been lifted, the tax authority had confirmed that the company had no outstanding tax debt, and the company's last asset had been removed from its balance sheet.

Why This Liquidation Was Not Typical

Shareholder Resolution No. 2 of November 6, 2023 required the director to transfer the corporate seals and all company records to the liquidator within 15 calendar days, but the director never did so. The same resolution placed the company into voluntary liquidation, appointed Disputes Law Firm attorney Dmytro Chuguienko as liquidator, and terminated the director's authority. Notice of the resolution was published on November 10, 2023, starting the two-month period for creditors to file their claims.

When the liquidation began, the liquidator held no company documents other than Resolution No. 2 itself, and a demand for the return of records sent on January 19, 2024 went unanswered. Without the charter, internal orders, personnel files, primary accounting records, and bank agreements, it is impossible to prepare an interim or final liquidation balance sheet or to pass a tax audit.

Background: Creditor Claims and the First Year of the Procedure

On January 10, 2024, the last day of the filing period, the liquidator received two identically formatted creditor claims. The former director claimed UAH 2,214,488.40 under repayable financial assistance agreements from 2017–2020 and UAH 33,008.93 in wages and vacation pay. His wife claimed UAH 486,574.07 under a January 10, 2018 agreement for the sale of a Volkswagen Passat, concluded between her as seller and the company, represented by her husband, as buyer. The claims were supported only by uncertified photocopies, which the liquidator could not authenticate because the originals remained with the director.

On January 24, 2024, the liquidator rejected both claims by Decision No. 1 as unsubstantiated and improperly documented. On January 30, 2024, the decision was sent to the director's wife by registered mail with a list of contents. The letter reached the post office on February 1, the addressee received two pickup notices but did not collect it, and on February 15, 2024 it was returned to the sender. Proof of this mailing was later used in both bankruptcy cases and in the defense against the counterclaim.

In July 2024, two more former employees filed wage claims, citing earlier claims allegedly sent on January 10, 2024 that the liquidator had never received. Both were rejected on July 29, 2024, because under Article 112(4) of the Civil Code of Ukraine, claims filed after the deadline are deemed extinguished.

In parallel, the liquidator filed criminal complaints with the Main Directorate of the National Police in the Odesa Region under Article 357 of the Criminal Code of Ukraine (theft of official documents and seals) and Article 358 (forgery of signatures on the creditor claims). The police did not register the complaints in the Unified Register of Pre-Trial Investigations. On May 14, 2024, an investigating judge of the Kyivskyi District Court of Odesa found the police inaction unlawful in both matters and ordered the investigations registered. Further attorney inquiries followed, along with complaints to the regional prosecutor's office and the Parliamentary Commissioner for Human Rights, and in February 2025 another investigating judge's ruling ordered the investigator to consider a motion to question the former director and the company's accountant. The criminal proceedings are open, but as of publication no one has been served with a notice of suspicion; in the commercial and civil cases, these proceedings formed part of the evidentiary record.

Because the documents were never returned, the liquidator opened a records-restoration procedure by Order No. 1L of January 29, 2025 and completed it by Order No. 2L of June 10, 2025. Cash records, payroll statements, trial balances, financial assistance agreements, and fixed-asset records for 2018–2025 were restored, which made it possible to proceed to the tax audit.

On August 14, 2025, Shareholder Resolution No. 3 replaced the liquidator, transferring the role to Disputes Law Firm Junior Partner Roman Kudlai, because the audit required close day-to-day interaction with the tax authority in Odesa. From that point on, Dmytro Chuguienko represented the company in court as its attorney.

The Defense Mechanism: Article 112(3) and (5) of the Civil Code of Ukraine

The defense in every court case rested on Article 112(3) and (5) of the Civil Code of Ukraine. Paragraph 3 provides that if the liquidation commission rejects a creditor's claim or fails to consider it, the creditor may, within one month from the date it learned or should have learned of the rejection, file a lawsuit against the liquidation commission. Paragraph 5 sets out the consequence: creditor claims that a court has dismissed, or that the liquidation commission has not recognized and that have not been challenged, are deemed extinguished.

Neither the former director nor his wife challenged the liquidator's Decision No. 1 of January 24, 2024 in court, and the one-month period expired in February–March 2024. Everything they filed in 2025–2026 was therefore based on claims that, under Article 112, had already been extinguished. The defense accordingly argued that the claims were extinguished rather than litigating whether the underlying debt existed.

The second line of defense was the existence of a dispute over rights. Under Article 39 of the Code of Ukraine on Bankruptcy Procedures, a commercial court must refuse to open bankruptcy proceedings if the petitioning creditor's claims reveal a dispute over rights that must be resolved through ordinary litigation. The company's lawsuit to declare the vehicle sale agreement a sham transaction created exactly such a dispute and, on its own, precluded the opening of bankruptcy proceedings.

Legal Position and Actions Taken in Each Proceeding

The Bankruptcy Petitions

On September 19, 2025, during the tax audit, the former director's wife petitioned the Commercial Court of the Odesa Region to open bankruptcy proceedings against the company for UAH 671,689.30, comprising the vehicle debt, inflation losses, three percent annual interest, and penalties. Had the court opened the proceedings, the voluntary liquidation would have been suspended and a bankruptcy trustee would have taken control of the company's assets and records.

In its response, attorney Dmytro Chuguienko set out two independent grounds for refusal. The first was a dispute over the validity of the agreement: apart from the creditor's own statements and the unverified photocopies attached to her January 2024 claim, there was no evidence before the August 2025 tax audit that the company owned the vehicle at all. The car was never recorded as a fixed asset, the payment deadline had twice been extended by addenda in 2019 and 2022 without any penalties, and in seven and a half years the seller had never attempted to collect. The second ground was that the claims were extinguished under Article 112 of the Civil Code. The company also drew the court's attention to the fact that the petitioner and the former director are spouses, are registered at the same address, use a shared email account, and filed identically formatted creditor claims on the same day.

On October 24, 2025, the court refused to open bankruptcy proceedings. It found a dispute over rights, held the claims extinguished because the liquidator's decision had not been challenged in time (a point the petitioner's counsel confirmed at the hearing), and excluded as inadmissible the company financial statements the petitioner had submitted as proof of the debt, since her counsel could not explain how a private individual had obtained the company's internal records. The parties' arguments and the court's reasoning in that ruling are covered in detail in our case study on the Commercial Court of the Odesa Region's refusal to open bankruptcy proceedings against the LLC.

Instead of appealing, the petitioner filed a new bankruptcy petition on November 17, 2025. The amount was reduced to UAH 588,854.07: the penalties were dropped, UAH 102,280 in "proceeding costs" was added, a different bankruptcy trustee was nominated, and a reconciliation statement and a debt acknowledgment letter, both dated September 1, 2023, were attached. In its response, the company submitted a side-by-side comparison of the two petitions showing that the factual grounds were identical and only the calculation method had changed. By the time the second petition was filed, the sham-transaction lawsuit had also already been filed. On December 19, 2025, the court again refused to open proceedings, noting specifically that the shared address and email of the petitioner and the former director indicated possible coordinated action and did not rule out that the claimed debt was artificial. Neither ruling was appealed.

The Former Director's Employment Lawsuit: First Round

On August 4, 2025, the former director filed a non-monetary lawsuit in the Khadzhybeiskyi District Court of Odesa seeking an order compelling the company to issue a copy of his dismissal order and a written statement of the amounts accrued on dismissal. Under Articles 47 and 116 of the Labor Code of Ukraine, an employer must issue these documents, but the personnel files, internal orders, and payroll records were in the plaintiff's own possession, and the liquidator had spent six months restoring them.

The company learned of the lawsuit by chance on August 29, 2025, because court correspondence had been sent to an outdated address. In its response, the company set out the circumstances and added that, from the date of the liquidation resolution, the former director held the status of a second-priority creditor, and that his monetary claims had been rejected by the liquidator in January 2024 and never challenged, and were therefore extinguished.

The plaintiff then took two procedural steps. First, he argued that attorney Dmytro Chuguienko lacked authority to represent the company, because the August 9, 2024 legal services agreement with the firm had been signed while he himself was the liquidator, supposedly making it a contract "with himself." The company explained that the agreement was concluded between the company and the law firm as a legal entity, not with the attorney personally, and that the warrant authorizing representation was issued after the liquidator had changed. The court considered the company's response on the merits and issued no ruling finding a lack of authority. The opposing side repeated the same argument in two other cases, and there too the courts considered the attorney's filings on the merits.

Second, on October 15, 2025, the day after a hearing at which the company's representative stated that the company was prepared to comply voluntarily by November 11, the plaintiff moved for interim relief. By a ruling of October 20, 2025, the court prohibited state registrars from registering the company's dissolution until the judgment in the case became final. Over the entire procedure, this was the only court order barring registration of the company's dissolution.

The company did not appeal the ruling. Instead, on November 6, 2025, the liquidator sent the plaintiff a copy of the dismissal order dated November 6, 2023 and a statement of accrued amounts showing zero figures, with an explanation that a calculation was impossible without the records the employee himself was withholding. On November 10, the company moved to close the proceedings for lack of a subject matter and to lift the interim relief. On November 26, 2025, the plaintiff himself moved to leave the claim without consideration. By a ruling of November 26, 2025, the claim was left without consideration and the interim relief was lifted. The registration ban had been in force for five weeks.

The Employment Lawsuit: Second Round

After receiving the zero-amount statement, the former director filed a new, monetary lawsuit on November 26, 2025 for UAH 41,588.02, covering wages for six days of November 2023, severance pay, compensation for unused vacation, average earnings for the delay in final settlement, and compensation for lost income. Together with the lawsuit, he filed a new motion to bar registration of the company's dissolution.

This time, on November 28, 2025, the court denied interim relief, holding that a ban on registration was disproportionate to a claim for a specific sum of money and unrelated to the subject of the dispute. The plaintiff later withdrew his appeal of that ruling, and on April 2, 2026 the Odesa Court of Appeal closed the appellate proceedings.

On the merits, the company took the same approach as in the first round. On January 22, 2026, it sent the plaintiff an offer to settle out of court and asked for his bank details, since the company's accounts had already been closed. The plaintiff received the offer on January 26 and did not respond. On February 12, 2026, the liquidator sent the plaintiff UAH 32,023 by postal money transfer, representing the claimed amount net of personal income tax and military levy, which were remitted to the state budget together with the unified social contribution. After the plaintiff's counsel pointed out an error in the plaintiff's own calculation, the company recalculated the amount, filed corrected tax reporting, and paid the difference. By a ruling of April 8, 2026, the proceedings were closed for lack of a subject matter. The total paid to the former director across both rounds was approximately UAH 33,600; in January 2024, as a creditor, he had claimed more than UAH 2.2 million.

The Sham-Transaction Lawsuit and the Counterclaim

At the same time as it responded to the first bankruptcy petition, the company sued in the Khadzhybeiskyi District Court of Odesa to have the vehicle sale agreement declared invalid as a sham transaction under Article 234 of the Civil Code of Ukraine. The court returned the original statement of claim over a defect in the payment of the court fee; the claim was refiled on November 11, 2025, after which the court transferred the case to the commercial court within the second bankruptcy case, and the commercial court sent it back once it had refused to open bankruptcy proceedings. The case was opened on February 5, 2026.

The defendant filed a response and a counterclaim for the same UAH 486,574.07, which was joined with the original claim on March 3, 2026. Her position was that the vehicle had in fact been re-registered to the company in 2018, that the debt had been acknowledged in a reconciliation statement and a letter dated September 1, 2023, and that she had never received the liquidator's rejection decision, so the one-month period under Article 112 of the Civil Code had never started to run.

The company tested both of the defendant's assertions, that the vehicle had been transferred to the company and that she had never received the liquidator's decision, against records held by government bodies. On February 2, 2026, attorney Dmytro Chuguienko sent an attorney inquiry to the State Customs Service of Ukraine, and on June 3, 2026, at the company's request, the court ordered the customs service to disclose who had been driving the vehicle at border crossings and ordered Ukrposhta, the national postal operator, to disclose the delivery record for the liquidator's decision. The customs service's response of June 11, 2026 recorded 18 border crossings by the vehicle between December 2022 and October 2024, at least 14 of them after the liquidation resolution; in most cases the driver was the former director himself, who listed the company's registered address as his own. Ukrposhta confirmed that the registered letter containing the liquidator's decision reached the post office on February 1, 2024, that two pickup notices were sent to the addressee, and that the item was returned as unclaimed.

This evidence refuted the defendant's claim that the vehicle had passed into the company's possession and established the date from which the one-month period to challenge the liquidator's decision began to run. No judgment on the merits will be issued in this case, however, because the company was dissolved without a legal successor on August 4, 2026, and on August 19, 2026 the company's attorney moved to close the proceedings under Article 255(1)(7) of the Civil Procedure Code of Ukraine. The counterclaim for UAH 486,574.07 falls away together with the proceedings. The motion was scheduled for hearing on September 10, 2026.

The Tax Audit and Confirmation of No Outstanding Debt

The unscheduled documentary audit by the Main Directorate of the State Tax Service in the Odesa Region ran from August 21 to 27, 2025 and covered the period from 2017 onward. Based on the audit report of September 3, 2025, four tax assessment notices were issued: a reduction of the company's tax loss by UAH 1,352,885; penalties of UAH 1,020 and UAH 680 for failing to file Form 20-OPP and for late filing of returns; and an additional corporate income tax assessment, including penalties, of UAH 531,673 for expenses not supported by primary documents and for failure to include an asset in income. All amounts were paid in four installments during October 2025 with funds from the parent corporation, without challenge, because tax litigation would have delayed the completion of the liquidation by years.

Once the taxes were paid, the company still needed the tax authority's clearance to be deregistered. On November 26, 2025, the tax authority refused to sign the clearance, citing pending court proceedings, namely the first employment lawsuit and the first bankruptcy petition. On December 12, 2025, the liquidator applied to have the obstacles removed, attaching the rulings leaving the claim without consideration and refusing to open bankruptcy proceedings. On January 9, 2026, the tax authority refused a second time, now citing the second employment lawsuit and the second bankruptcy petition. The tax authority treated every new proceeding as an obstacle to deregistration, so the company sought to have the proceedings closed rather than to win judgments on the merits. On May 11, 2026, the liquidator filed a final application enclosing the rulings in all four cases. On June 15, 2026, the tax authority confirmed that on June 10, 2026 it had reported to the Unified State Register that the company had no outstanding tax or social contribution debt.

The Vehicle on the Balance Sheet

The same Volkswagen Passat was both a subject of litigation and an obstacle to completing the liquidation. The liquidator learned that it was on the company's balance sheet during the tax audit. The former director had not handed over the vehicle registration certificate, the car's whereabouts were unknown, and traffic fines associated with it began arriving at the liquidator's address. A company cannot be struck from the register while any property remains on its books, so the vehicle had to be taken through a full cycle of registration procedures without the original documents.

On August 29, 2025, the liquidator filed a police complaint for unlawful taking of a vehicle; after a complaint about police inaction, an investigating judge of the Shevchenkivskyi District Court of Kyiv ordered on September 10, 2025 that the matter be entered in the register, which the police did a month later. In November 2025, a certificate confirming that the vehicle was listed on the military register was obtained. In June 2026, the registration certificate was restored by order of the liquidator, and in July the vehicle was removed from the military register. This work was carried out by attorney's assistant Olha Honcharuk and attorney Bohdan Orlovskyi, the firm's regional representative in Odesa. At the end of July 2026, by order of the liquidator, the vehicle was deregistered under the Procedure for State Registration (Re-registration) and Deregistration of Motor Vehicles approved by Resolution of the Cabinet of Ministers of Ukraine No. 1388 of September 7, 1998 (Порядок державної реєстрації (перереєстрації), зняття з обліку автомобілів, автобусів, а також самохідних машин, сконструйованих на шасі автомобілів, мотоциклів усіх типів, марок і моделей, причепів, напівпричепів, мотоколясок, інших прирівняних до них транспортних засобів та мопедів). The company's balance sheet was now empty.

Result

On August 4, 2026, two years and nine months after the liquidation resolution, the Unified State Register recorded the state registration of the company's dissolution by liquidation. The company was deregistered with the tax authority on the same day.

By the date of dissolution, no proceeding against the company stood in the way of registration: the court had twice refused to open bankruptcy proceedings (October 24 and December 19, 2025); the first employment lawsuit had been left without consideration and the registration ban lifted (November 26, 2025); the second employment case had been closed for lack of a subject matter (April 8, 2026); interim relief in the second case had been denied, and the plaintiff had withdrawn his appeal of that denial. Of the more than UAH 2.7 million claimed by the former director and his wife, the company paid approximately UAH 33,600 in employment-related amounts, a sum it had been prepared to pay from the outset had the records needed for the calculation been available.

Conclusion

Article 112 of the Civil Code of Ukraine gives a liquidator a tool against claims that a creditor fails to challenge in time. If the liquidator rejects a claim by a properly drafted decision and sends it with proof of mailing, the one-month challenge period begins to run, and once it expires the claim is deemed extinguished, regardless of any reconciliation statements or debt acknowledgment letters the creditor produces later. The commercial court twice refused to open bankruptcy proceedings and, in its first ruling, expressly held the claims extinguished under this article. The second ground for refusal was the existence of a dispute over rights (Article 39 of the Code of Ukraine on Bankruptcy Procedures), which prevented the voluntary liquidation from being converted into bankruptcy while the validity of the agreement remained unresolved.

Every open proceeding, whatever its prospects, gave the tax authority a reason to withhold clearance and gave the opposing side grounds for a new motion for interim relief. The company therefore paid off claims that could be resolved for a few tens of thousands of hryvnias and sought closure of those proceedings, while contesting claims based on an already extinguished debt by relying on Article 112 of the Civil Code of Ukraine. The dispute over the validity of the agreement, which could have lasted for years, lost its purpose once the company was dissolved. Winning the liquidation meant not obtaining judgments against the opposing side, but leaving it with nothing to base its next lawsuit on.