The Code on Bankruptcy Procedures is another step to improve business climate in Ukraine, and introduction of the world’s practice of personal bankruptcy into the national legislation is undoubtedly a significant innovation.
Ms Lada Konduforova, Chief Legal Officer – Head of Legal Function of Smart-Holding, noted this in the comment to UNIAN.
According to her, the Code also contains a number of significant innovations concerning the bankruptcy of legal entities.
‘First of all, expediting of the bankruptcy procedure, including by reducing the list of grounds for cassational appeal of decisions, and cutting of the cost associated with the procedure in general can be referred to as positive aspects. Secondly, one can see, at least at the regulatory level, a desire to make the bidding procedure more transparent and more efficient by introducing an electronic trading system. Unfortunately, the Code does not contain provisions that would allow avoiding problems with the sale of collateral (as part of the property/asset package), and therefore avoiding problems that arise in the distribution of the received funds when settling the requirements of collateral and bankruptcy creditors. Thirdly, a lot of attention has been given to the role of the arbitration manager in the procedures and to vesting him/her with the rights that, I hope, would allow significant shortening of bankruptcy procedures’ time, if properly exercised,’ said Ms Konduforova.
She also stressed that setting of a three-year period for invalidation of the debtor’s property transactions with related persons looks ambiguous: on the one hand, it protects the interests of creditors against unscrupulous actions of a debtor, and on the other hand, it gives grounds for deliberate manipulation of stakeholders in order to delay the procedure.
Ms Konduforova noted that effectiveness of the Code’s new provisions can be assessed only after gaining certain experience in implementing them, including consideration of the practice of such rules being applied and construed by the courts, for example, provisions regarding advance payment of fees and expenses of an arbitration manager or regarding creation of an automated arrest of funds in the debtor’s bank accounts. Time will show whether this will give additional protection to the interests of creditors or will become another unjustified expense or means of pressure.
‘It is also difficult to predict how painless will be the transition to the application of the new legal norms in relation to bankruptcies, where the respective procedure was initiated before the Code entered into force. To ensure compliance with the Code, it is also necessary to adopt about 30 regulatory acts. I hope they will be adopted in due time and will not change the course of the main document regarding the simplification of bankruptcy procedures and their cost cutting. In any case, in my opinion, this is another step to improve the business climate in the country,’ said Ms Konduforova.