Automated selection of arbitration managers will not be good for creditors, says expert
Kyiv, May 31 (Interfax-Ukraine) – The appointment by economic courts of arbitration managers for bankrupt companies using an automated selection system, which is in line with the new version of the law on bankruptcy, is nonsense, as the probabilistic principle of appointing arbitration managers would not promote the maximum satisfaction of claims of creditors.
An advisor at the Pavlenko & Poberezhnyuk Law Group, Tetiana Ihnatenko, gave this opinion at a briefing at Interfax-Ukraine, analyzing the new version of the law on the resumption of solvency of debtors or declaring them bankrupt, which takes effect on January 19, 2013.
"Using the automated system, the courts will select arbitration managers for bankrupt companies - this is nonsense. I, as a creditor, file a claim, and I [could get] a candidate [for arbitration manager] who might even come from an absolutely different region, a person who cannot help me as a creditor in the procedure. It all depends on arbitration managers whether a debt to creditors is paid and how the procedure goes," Ihnatenko said.
She said that the Justice Ministry proposes to set a fixed term for property management – six months - without the possibility of prolonging it.
"I don't agree with the opinion of the Justice Ministry regarding the impossibility of suspending proceedings in the bankruptcy procedure if the documents inside the procedure are challenged, for example, declaring a debtor bankrupt. There are different cases - on one hand, the suspension is misused by debtors and creditors. However, there are cases in which the claims of creditors are not included in the list, and they have to spend a lot of time on this," she said.
President of the Union of Crisis Managers Pavlo Mikhailidi also criticized the procedure for the selection of arbitration managers.
"Let's imagine that an arbitration manager who has worked in the sphere only six months and who has not had much practice is appointed to a company like Kryvorizhstal," Mikhailidi said.
He said that the new version of the law on bankruptcy would not be attractive, as it does not protect the right of ownership.
"The interests of workers are not protected in the new law, as there is no mechanism for the protection of companies and creditors from the removal of assets by managers before the bankruptcy procedure. Usually we have companies without assets which enter the bankruptcy procedure and creditors have nothing after the sale of remaining assets," Mikhailidi said.
In addition, he said that the law violates the constitutional principle of equality of all forms of ownership.
"But the state retained privileges in the line - it is first in the line of creditors, or suppliers of services and goods to obtain debts from bankrupt companies," he said.
Deputy Board Chairman of Eurogasbank, Dmytro Kiryakov, said that the position of the banks as creditors of bankrupt companies is better, as banks usually have collateral.
"Another [issue for] the banks is when their clients are bankrupt. This is an issue of cooperation with arbitration managers, the law-enforcement services and creditors on the arrest of accounts. The law on bankruptcy did not change this section a lot. The procedure for the closure of accounts and the regulation of current accounts have been settled in acts of the National Bank of Ukraine [NBU]," the banker said.
He said that it was unclear if the NBU had changed its policy in these issues.
"I think that it would not be in a hurry to do so. The banks are participating and cooperating with all parties in the issue. There are no difficulties with the new law. I don't think very much will change here," he said.