This is great, I could not reason about how to effectively use fold here, building the number up by shifting the previous value makes a ton of sense.

Wow, very clever. Took some thinking to understand what you did here, but fun solution!

I think iterating on the positions while removing them means you are skipping some removals in each pass. Consider if you remove entries 0, 1, 2 on the first pass, you'll be pointing 4 items further than you want after that.

Agreed, the inconsistent return types is a bad recommendation for newbies.

Agreed, I initially implemented a recursive function (in C++) and had to back away from it because of the strange edge case.

'm n ttl grmnt wth ths cmmnt!

You can iterate directly on characters, avoiding the char znak and assigning i to it, like so:

for (char c = 'a', c <= 'z', c++)
{
    // use c in place of znak.
}

Hope that helps!

My original solution did use a SortedSet, but I could not get it to be performant (did not know about first()/pollFirst()), so I went down to using actual bit math. I suspect this is the most performant option. It doesn't include the early exit for when u.size>y that my original solution had, either, so it could probably be faster.