№4(15)(2013)

The updated law "On Bankruptcy" is valid from 19 January 2013, but issues of criticism and misunderstandings on the part of lawyers, banks and arbitration managers did not diminish. How to interpret provisions of the Law, how to work on it, and which consequences we would expect, tried to understand participants of conference “Bankruptcy and Restructuring: The New Rules".

Event took place on April 18 in business center "Arena City". It was organized by the Centre for Commercial Law, the NGO "Self-regulatory organization of specialists in competitive process" and the newspaper "Legal Practice". Although professional rally was called the conference, organizers have tried in every possible way to transfer it into a format of briefings working with live discussion. It is not so often that one gets the chance to gather under one roof and talk openly to practitioners, delegates from public and professional self-regulatory organizations, as well as representatives of legislative and judicial branches.

At this time, participants decided to discuss ideology and basic novels in reform of bankruptcy law, the first trial courts in applying law, changes in status and powers of trustee, selling assets of debtor, as well as some international aspects in process of bankruptcy.

Perhaps the key passage came from the arbitration manager Sergei Donkov: he greeted his fellow hard workers, paired with new legislative experiments, and noted that it’s no longer a secret that "experiments are taken over arbitration managing directors in Ukraine, as over fruit fly". One of the last – is a new version of law on bankruptcy.

Initially, the project was parliamentary, but even from the first edition, which all have repeatedly seen and read, "only bits and pieces were left: each strove to bring something in, to exclude or to lobby", - said arbitration manager Leonid Talan. As a result, planned reform came out of the walls of Parliament in a much distorted version, and professional community had an occasion for reflection and number of questions that can not be answered nor by judge nor by other participants in process.

Now one thing is clear: legislative innovations in the field of bankruptcy were not the end, but only beginning ... According to deputy chairman of parliamentary committee on economic policy Ksenia Liapina, "bankruptcy law - is alive, and it will change". The Committee has already prepared a number of changes to document and it is possible that this is not the last attempt. In this case, the primary task - modern methods of work to resolve arbitration managers and others involved in market process. "If earlier the bankruptcy law was successfully used to get rid of creditor, not to satisfy his desires or complaints, but now the concept has changed, - says Ksenia Lyapina. - Now it is important to balance the rights of creditor and debtor and to focus on obligations of the latter".

During discussion, delegates raised three key issues around which there is inexhaustible controversy between the Supreme Economic Court of Ukraine (hereinafter - SECU), the Centre for Commercial Law and the Committee of the Supreme Council on economic policy:

- The deadline for creditor to apply with his demands;

- The lack of universal law of auctions;

- Self-regulation of arbitration managers’ activity.

The most relevant issue is deadline. According to director of the Centre for Commercial Law Valentina Danishevskaya, obligations can not disappear so simply and therefore they do not depend on period. Expert noted that before developing position on this issue, the Center examined recommendations of the UN Commission on International Trade Law (UNCITRAL), which explored bankruptcy legislation in a number of countries and described their practices. Such a case, that after expiration of term, creditors lose the right to receive money even if property is still there, was not found anywhere else. "There are different approaches, but they depend on kind of reorganization we need - legal or economic" - said Danishevskaya.

Ksenia Liapina also believes that "country should overcome this approach, to put it mildly". In addition, the committee introduced a bill in concept that regardless deadline will allow creditors to assert their claims and get to that place where they rightfully should be, but without possibility to vote. However, SECU took a strong position and trying to prevent abolition of deadline.

The second, equally important question for more than seven years being discussed in legal and professional circles – is the lack of law on auctions. How to organize them, under which procedure they are performed and when legal fact of buying by those, who won the auction, is enforced - those aspects are not covered by legislation. And if not written, then are regulated with practice that is far too diverse, or by some narrow laws, which is extremely inefficient. According to Ksenia Liapina, the committee plans to adopt a universal law of auctions, "which will be applicable to both bankruptcy process, and for processes of land, as in sale of confiscated property there is a lot of abuse". But so far it is only in plans. Meanwhile, "experts alarmed on possible speculation in auctions under new law, in particular recognition of auction results null and void" - said the deputy dean of the Faculty of Law of International Relations of KNU T.Shevchenko, Anatoly Miroshnichenko.

The third question was about self-organization of arbitration managers. Ksenia Liapina stressed that the word "self-regulation" is now in vogue, we often use it, but no one thinks about what is behind this concept: "Financial markets have already experimented with this format, but it is impossible to say that the market is satisfied, it is also too early to speak about fruits of experiment". According to expert, it is important to know what people think about this practice and how they see relationship with the Ministry of Justice, the market regulator.

You also need to understand clearly what features the market participants are willing to give to such organizations, because "self-regulatory organization - is not just a public association and organization that you voluntarily delegate part of your economic sovereignty to allow further checking. What are you willing to do about it? And if the market is willing to voluntarily give such powers? These are very complex and controversial issues", - notes Ksenia Liapina. To get closer to their resolution in the Parliament they created a separate expert advisory council for bankruptcy. Thus, lawmakers want to attract as many practitioners’ opinions to resolve quickly the issues and to ensure legislature stream of fresh ideas directly from the market.

Valentina Danishevskaya also drew attention to some positive changes in new law: "First, moratorium on sale of state owned enterprises and businesses that have 25 or more percent of participants in statutory capital, is cancelled. In 12 years of moratorium existence so many SOE’s property was ruined, so much stolen and messed. After all, if 12 years ago it was possible to sell it for something, now - that's nothing. Second, features of bankruptcy procedure, when debtor is absent, were cancelled. There were two functional tasks: to cover their tracks, or to improve statistics. Apparently, they are already fed up with this, and finally cancelled".

At the end of conference tired but happy participants concluded that meeting was very productive, but an active debate has not worked. And open issues and questions are still more than answers and implemented tasks, so these activities should be held more frequently and on narrower topics to find new nuances, flaws in legislation, analyze them and eliminate gradually.