Simplification of access to bankruptcy procedures, review of draft law No. 7442 in terms of problems arising in the property disposal procedure (+ template Petition to terminate the powers of the debtor's manager)

  The Code of Ukraine on Bankruptcy Procedures (hereinafter - the Code of Bankruptcy Procedures), which has significantly increased the efficiency of bankruptcy procedures, over time and in accordance with today's realities, needs changes and additions. The state of war and the post-war period require special attention and consideration in the aspect of bankruptcy procedures. In order to simplify access to bankruptcy procedures and increase the effectiveness of their application in war and post-war conditions and to clarify a number of procedural issues and eliminate inconsistencies and deficiencies identified during the practical application of the provisions of the Code of Ukraine on bankruptcy procedures .

Therefore, we propose to review the main points of the draft Law of Ukraine "On Amendments to the Code of Ukraine on Bankruptcy Procedures Regarding the Application of Bankruptcy Procedures During Martial Law" dated June 7, 2022 N 7442 .

In particular, the draft law vol   it is assumed:

- securing creditors' claims by imposing a seizure not only on movable property and not only on the debtor, but also on the property of persons who, in accordance with the Code , bear subsidiary or joint liability with the debtor.

- the concept of the request of the arbitration manager and the simplification of the property manager's access to information about the debtor's accounts (including through the prism of bank secrecy) is introduced, as well as other effective mechanisms of actual control over the debtor's economic activities through the property manager's access to information stored in databases ( including electronic ones), which are used by the debtor's officials for accounting, tax and management accounting, as well as for the formation of accounting, statistical and tax reporting

- conducting the creditors' committee and creditors' meetings remotely.

In our opinion, the specified proposals will allow the arbitration manager to exercise his powers in the case of bankruptcy (insolvency) properly and in a timely manner, without an additional appeal to the commercial court, which will result in a reduction in the terms of consideration of cases and a reduction in the costs associated with their consideration, however , carry   the risk of seizure of the property of directors and participants/founders of enterprises that are liquidated through bankruptcy proceedings.

Regarding the completion of the project by stages. Thus, on 07.06.2022 it was received by the Verkhovna Rada of Ukraine with an explanatory note and a comparative table, on 16.08.2022 it was accepted as a basis, and on 25.07.2022 the Conclusion of the Main Scientific and Expert Administration and the Conclusion of the Committee on Economic Development were provided. As of now, the draft law is in the second reading (from November 22, 2022), so we are monitoring its adoption.

One of the problems to be solved by such changes to the Code is, in particular, the simplification of the property disposal procedure. As you know, according to Art. 44 of the Civil Code , property disposal means a system of measures for supervision and control over the management and disposal of the debtor's property in order to ensure the preservation, effective use of the debtor's property assets, the analysis of his financial condition, as well as the determination of the next procedure (rehabilitation or liquidation).

At the same time , part 2 of Art. 12 , h.ch. 3, 4 Art. 44 of the Code of Civil Procedure, it is the property manager who is responsible for conducting an analysis of the financial and economic situation and is responsible for non-fulfillment of the powers assigned to him.

Analysis of the financial and economic condition of business entities regarding the presence of signs of fictitious bankruptcy, bringing to bankruptcy, concealment of persistent financial insolvency, illegal actions in the event of bankruptcy (hereinafter - Analysis) is carried out in accordance with the Methodological recommendations for detecting signs of enterprise insolvency and signs of cover- up actions bankruptcy, fictitious bankruptcy or bankruptcy, approved by the order of the Ministry of Economy of Ukraine dated January 19, 2006 No. 14 (as amended by the order of the Ministry of Economy of Ukraine dated October 26, 2010 No. 1361).

The main sources of information for conducting the analysis, in accordance with Clause 1 of Chapter II of the Methodological Recommendations, are, in particular, the balance sheet of the enterprise, the report on financial results, the statement of cash flows, the statement of equity, notes to the annual financial statements, the report on the availability and movement of fixed assets, depreciation (depreciation), survey of technological innovations of an industrial enterprise, report on financial results and receivables and payables, labor report; a report on the state of working conditions, benefits and compensation for work with harmful working conditions; a report on the use of working time; report on production of industrial products; other information necessary for analysis and identification of production reserves.

At the same time, if the manager of the debtor does not provide the specified documents to the manager of the property, the manager of the property is deprived of the opportunity to obtain them on his own, since he is not the manager of the debtor and is therefore limited by certain procedures, including bank secrecy, etc. What should be done in this case in order not to be at the stage of property disposal and to provide the creditors with an analysis of the debtor's financial condition in order to resolve issues regarding the next bankruptcy procedure?

In our opinion, there is currently a fairly effective mechanism for terminating the powers of the debtor's manager and imposing such obligations on the property manager.

In accordance with Part 12 of Art. 44 of the Civil Code , the powers of the head of the debtor and the executive bodies of his management assigned to them in accordance with the legislation or founding documents may be terminated if they do not take measures to ensure the preservation of the debtor's property, create obstacles to the actions of the property manager or allow other violations of the law.

In the case of discovery of the circumstances provided for in the first paragraph of this part, at the request of creditors or other parties to the case, by a decision of the commercial court, the powers of the head and executive bodies of the debtor's management are terminated, and the performance of the corresponding duties is temporarily entrusted to the administrator of the property until the appointment in the manner determined by the legislation and the constituent documents, the new head of the debtor and executive bodies of the debtor's management.

Therefore, such a petition can be submitted by any participant in the bankruptcy case, such as a creditor, the administrator of the property, etc. We offer to create a Petition for the termination of the powers of the debtor's manager (from the creditor)   in the Instaco designer using the link . To create, you only need to enter the necessary data in the designer.

The motion to terminate the powers of the debtor's manager (from the creditor) was prepared by attorney Natalya Krasnokutska (Instagram @advocate_knn , Facebook instaADVOCATE ) .

The lawyer conducts legal consultations on issues of business support:

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• by e-mail advocate_knn@ukr.net