Systemic crisis in the road industry: the Supreme Court demands urgent intervention from the Cabinet.
What does a separate ruling in the case of the Subsidiary Enterprise “Odessa Oblavtodor” signal and why the bankruptcy procedure of state-owned enterprises has become a threat to the infrastructure and national security of the country.
The Cassation Economic Court of the Supreme Court has adopted a precedent-setting decision that goes far beyond the boundaries of an ordinary commercial dispute. With its separate ruling of April 28, 2026 in case No. 916/4081/21, the highest court appealed directly to the Cabinet of Ministers of Ukraine. The reason for such a step, at first glance, is local – the critical situation surrounding the bankruptcy of the Subsidiary Enterprise “Odessa Oblavtodor”. However, behind the name of one subsidiary, a deep, chronic disease of the entire strategic sector of the state is hidden. The Supreme Court made it clear: the judicial system will no longer turn a blind eye to the liquidation of assets that ensure the country’s vital activities due to the inaction of relevant officials.
The history of the liquidation of the Subsidiary Enterprise “Odessa Oblavtodor” bears signs not only of economic insolvency, but of a consistently implemented scenario of purposefully bringing the enterprise to bankruptcy, which was largely a consequence of a systemic problem in making managerial decisions. The state asset for a long time actually remained without proper support, and key decisions were either not made in a timely manner, or were formal and ineffective, which deliberately contributed to the accumulation of critical debt.
Bankruptcy proceedings were opened back in July 2022, with the introduction of a moratorium and a property disposal procedure. However, these tools, instead of stabilizing operations, were not used properly due to the lack of a clear strategy and responsible management decisions, which only deepened the crisis. Even the approval of a three-year rehabilitation plan in June 2024 looked more like a formal step than the result of thoughtful anti-crisis management.
Further events indicate a systemic failure to fulfill obligations: ignoring the debt repayment schedule, increasing debt, and the lack of effective measures by responsible persons, which directly indicates managerial incompetence or deliberate delaying of processes. In August 2025, the initiation by the chairman of the creditors’ committee of the issue of declaring the enterprise bankrupt was the logical conclusion of this process, which developed according to a previously predicted scenario.
The court decisions to terminate the rehabilitation and initiate the liquidation procedure formally comply with the requirements of the legislation. At the same time, in a broader context, this appears to be a consequence not only of inaction, but also of a systemic crisis in decision-making in the management of state-owned enterprises, which has actually led to the loss of a strategic asset and creates serious risks for state interests, raising the question of whether there are signs of bankruptcy.
At the court hearing, the Company’s representative, Zhyrna Ya.V., presented convincing arguments in support of the cassation appeal, emphasizing the inadmissibility of liquidating such subsidiaries. The Supreme Court completely overturned the liquidation decision and sent the case for a new hearing. The highest court pointed out that the lower courts had approached the process too formally. They had completely ignored the provisions of Article 96 of the Code of Bankruptcy Procedures of Ukraine (CUB), which regulates the specifics of bankruptcy of state-owned enterprises. Liquidation of the Subsidiary Enterprise “Odessky Oblavtodor” is not just the closure of a private company. The Supreme Court emphasized that the liquidation procedure means the complete cessation of the entity’s economic activity without legal succession. In practice, this will lead to the actual cessation of construction, reconstruction, repair and, most importantly, daily maintenance of public roads of state importance. At a time when logistics and transport arteries are a matter of state survival, such an approach is unacceptable.
The most resonant part of the court ruling is the list published by the court. “Odessa Oblavtodor” is just the tip of the iceberg. Bankruptcy proceedings are currently open against more than fifteen other oblavtodors throughout Ukraine: SE “Volyn Oblavtodor”, SE “Dnipropetrovsk Oblavtodor”, SE “Rivne Oblavtodor”, SE “Ternopil Oblavtodor”, SE “Mykolaiv Oblavtodor”, SE “Zaporizhzhia Oblavtodor”, SE “Poltava Oblavtodor”, SE “Kyiv Regional Road Administration”, SE “Zhytomyr Oblavtodor” and SE “Cherkasy Oblavtodor”, SE “Kirovohrad Oblavtodor”, etc. This list is impressive. We are not dealing with isolated commercial failures of individual managers, but with clear evidence of a long-term systemic payment crisis in the state road sector. The court directly states: the bodies authorized to manage this property are demonstrating inaction. They allow judicial procedures to completely limit or paralyze the management bodies of road companies, instead of eliminating the root causes and factors of the debt hole.
This separate ruling is revolutionary, as it actually changes the rules of the game and the philosophy of considering bankruptcy cases of strategic state-owned enterprises. The court recognized that the application of standard procedures of CUB to such enterprises is the least effective development of events. Judicial reorganization drags on for years, creating uncertainty for creditors, and liquidation simply destroys the enterprise. Non-judicial options for exiting the crisis have priority, but state bodies ignore them.
In this regard, the Court demands an immediate return to the principle of “good governance”. State bodies are obliged to act in a timely, consistent and appropriate manner. Article 4 and Article 96 of the CUB clearly impose on the Cabinet of Ministers of Ukraine and relevant ministries the obligation to promptly identify signs of insolvency and take measures to prevent the bankruptcy of state-owned enterprises.
At the same time, the Supreme Court demonstrated a very balanced position that will not allow state officials to use this decision as a shield from creditors. The court specifically emphasized: the debtor’s belonging to the public sector of the economy does not create procedural immunity for him from bankruptcy procedures. The state cannot unreasonably postpone the satisfaction of the claims of a private business that has honestly performed its work or supplied materials. Bankruptcy proceedings should not replace state administration. If the enterprise is of public importance, the state must either ensure its solvency or, in the event of liquidation, clearly identify other persons who will take over the functions of road maintenance in order to prevent the collapse of the transport system.
Thus, the Supreme Court, as a representative of one of the branches of government, has in practice used a system of checks and balances, which, in turn, is a support in protecting state interests, preventing the formal approach to interpreting legal norms from making it possible to harm a strategically important industry.