Given the unstable economic situation existing currently in Ukraine, debtors become insolvent and unable to make settlements with their creditors with increasing frequency, and this negatively affects the stability of business practice. As a rule, bankruptcy procedures used against such debtors turns out to be inefficient, and the amount of creditors’ claims significantly exceeds the value of debtor’s assets. The absence of the debtor’s property assets often results from actions of its founders or management bodies, and this gives rise to the question of bringing such persons to liability within the framework of a bankruptcy case. The purpose of this article is to provide scientific reasoning and formulate proposals for improving the legal regulation of the institute of liability of a debtor’s founders (members, shareholders) and a debtor’s CEO in a bankruptcy case, and also to expand and clarify in more details the conceptual and categorical apparatus of insolvency (bankruptcy) law. It is established that national legislation provides for various measures of liability of individuals and legal entities in the bankruptcy procedure. The analysis of national legislation leads to the conclusion that there is no consistency in the conceptual and categorical apparatus of the institute of individuals’ and legal entities’ liability for illegal actions in bankruptcy. To ensure integral regulation of the institute of individuals’ and legal entities’ liability for illegal actions in bankruptcy, the author proposes to use the term «the person controlling the debtor” which should cover the debtor’s founders (members, shareholders), CEO, as well as other persons who are authorized to give instructions binding upon the debtor or who are otherwise capable of determining its actions; the author also studies the challenging aspects relating to the termination of authority of the debtor’s CEO in the procedure of assets disposal; the article also provides an analyses of the court practice of subsidiary liability of the debtor’s founders. The author concludes that criminal and administrative liability (which mostly has a penal function) does not assure appropriate protection of proprietary rights of an insolvent debtor’s creditors, and in this context pecuniary and procedural liability of persons controlling the debtor within the framework of a bankruptcy case takes on great importance, and these persons are in the focus of this article.

List of legal documents 
 

Legislation 
1. Kodeks Ukrainy pro administratyvni pravoporushennia [Code of Ukraine on Administrative Offenses]: Zakon Ukrainy [the Law of Ukraine] vid 7 hrudnia 1984 r. № 8073-X. URL: http://zakon.rada.gov.ua/laws/show/80731-10 (accessed: 09.05.2018) (in Ukrainian). 
2. Kryminalnyi kodeks Ukrainy [Criminal Code of Ukraine]: Zakon Ukrainy [the Law of Ukraine] vid 5 kvitnia 2001 r. № 2341-III. URL: http://zakon5.rada.gov.ua/laws/ show/2341-14 (accessed: 09.05.2018) (in Ukrainian). 
3. Pro vidnovlennia platospromozhnosti borzhnyka abo vyznannia yoho bankrutom [On Restoring Debtor’s Solvency or Declaring it Bankrupt]: Zakon Ukrainy [the Law of Ukraine] vid 14 travnia 1992 r. № 2343-XII. Vidomosti Verkhovnoi Rady Ukrainy. 1992. № 31. St. 440 (in Ukrainian). 
4. O nesostoyatelnosti (bankrotstve) [On Insolvency (Bankruptcy)]: Federalnyiy Zakon Rossiyskoy Federatsii [Federal Law of Russian Federation] ot 26 oktyabrya 2002 g. № 127-FZ. URL: http://www.consultant.ru/document/Cons_doc_LAW_39331/ (accessed: 01.03.2018) (in Russian). 

Cases 
5. Postanova Verkhovnoho Sudu [Decision of the Supreme Court] vid 30 sichnia 2018 r. u spravi № 923/862/15 pro bankrutstvo Pryvatnoho pidpryiemstva “Zoloto Laniv”. URL: http://reyestr.court.gov.ua/Review/72008724 (accessed: 30.04.2018) (in Ukrainian). 
6. Ukhvala Hospodarskoho sudu Khersonskoi oblasti [Rule of the Economic Court of Kherson Oblast] vid 6 lystopada 2014 r. u spravi № 5024/1780/2011 pro bankrutstvo Komunalnoho pidpryiemstva “Khersonkomunservis”. URL: http://reyestr.court.gov. ua/Review/41407626 (accessed: 30.04.2018) (in Ukrainian). 

 

Bibliography 
 

Authored books 
7. Butyrska I, Pravovyi status uchasnykiv spravy pro bankrutstvo [The Legal Status of the Participants of Bankruptcy Case] (Tekhnodruk 2017) (in Ukrainian). 
8. Pryhuza P ta Pryhuza A, Naukovo-praktychnyi komentar Zakonu Ukrainy “Pro vidnovlennia platospromozhnosti borzhnyka abo vyznannia yoho bankrutom” u redaktsii z 18 sichnia 2013 roku (doktrynalne tlumachennia norm prava neplatospromozhnosti ta statei 1-21 [Scientific and Practical Commentary of the Law of Ukraine “On Restoring Debtor’s Solvency or Declaring it Bankrupt” in the Wording of January 18, 2013 (Doctrinal Interpretation of the Rules of the Insolvency Law and Articles 1-21] (TDS 2013) (in Ukrainian). 
9. Polyakov B, Zakon Ukrainyi “O vosstanovlenii platezhesposobnosti dolzhnika ili priznanii ego bankrotom”: Nauchno-prakticheskiy kommentariy [Law of Ukraine “On Restoring Debtor’s Solvency or Declaring it Bankrupt”: Scientific and Practical Commentary] t 1 (Logos 2014) (in Russian). 
10. Stepanov A, Preduprezhdenye bankrotstva v ramkakh proizvodstva po delu o bankrotstve: Teoryia i praktika [Bankruptcy Prevention in the Framework of Bankruptcy Proceedings: Theory and Practice] (KNT 2008) (in Russian). 

Articles 
11. Kantser Yu, ‘Privlechenie k subsidiarnoy otvetstvennosti kontroliruyuschih dolzhnika lits v ramkah dela o bankrotstve’ [‘Involvement of Persons Supervising the Debtor in the Framework of the Bankruptcy Case to Subsidiary Responsibility’] (2011) 4 Obschestvo: politika, ekonomika, pravo 132 (in Russian). 
12. Podtserkovnyi O, ‘Shchodo pytan pro systemnu pobudovu vykliuchen z prava bankrutstv ta poperedzhennia umysnoho spysannia borhiv’ [‘On the Issue of the Systematic Construction of Bankruptcy Foreclosures and the Prevention of Deliberate Write-offs of Debts’] (2011) 1 Sanatsiia ta bankrutstvo 102 (in Ukrainian). 
13. Rieznikova V, ‘Vidpovidalnist u hospodarskomu protsesi za zlovzhyvannia protsesualnymy pravamy ta zakhody protsesualnoho prymusu’ [‘Responsibility in the Economic Process for Abuse of Procedural Rights and Measures of Procedural Coercion’] (2017) 9 Pravo Ukrainy 101 (in Ukrainian). 

Dissertations 
14. Hrabovan L, ‘Pohashennia vymoh kredytoriv u protseduri bankrutstva’ [‘Repayment of Claims by Creditors in the Bankruptcy Procedure’] (dys kand yuryd nauk, Natsionalnyi universytet “Odeska yurydychna akademiia” 2017) 181 (in Ukrainian). 

Websites 
15. Struts M, ‘Bankrutstvo ta vidpovidalnist vlasnykiv ahropidpryiemstv vlasnym mainom’ (IMG Partners, 14 Liutyi 2018) [‘Bankruptcy and Liability of Owners of Agricultural Enterprises by Own Property’] accessed 30 April 2018 (in Ukrainian).