Representing the debtor during the monitoring procedure
Legal support in the event of charges against the manager during or after bankruptcy proceedings;
Advice for executives – a scheme to reduce the staff of employees of the company, taking into account the specifics of the bankruptcy procedure;
Oral and written legal advice from specialists on all matters of bankruptcy procedure of individuals and entities: its order and consequences;
Surveillance is the first procedure in a bankruptcy case to be introduced by the definition of an arbitration court following a bankruptcy application.
In the monitoring procedure, the court-approved interim manager is obliged.
Take measures to ensure the safety of the debtor’s property.
Identify the debtor’s creditors.
Maintain a registry of requirements.
To carry out a general check, the results of which to conclude that there are /no signs of deliberate (fictitious) bankruptcy.
The report may or may not be approved by the general meeting of creditors to convene and hold the first meeting of creditors, at which the manager’s report must be considered.
The main risks and errors in the debtor’s bankruptcy process:
Failure to comply with the requirements of the interim manager and the court may entail the responsibility of the manager.
The protection of the debtor’s interests before creditors should be carried out by trusted lawyers, as not always the interests of the interim (arbitration manager) coincide with the interests of the debtor.
Misrepresentation of the information provided as a result of the conflict between the owners and management of the company.
Key stages of the company’s bankruptcy procedure:
Stage 1. The debtor’s sanction before the initiation of bankruptcy proceedings (pre-trial rehabilitation).
We are talking about a system of measures to restore the solvency of the debtor, which can be carried out by the founder (participant, shareholder) of the debtor, the owner of the property (the body authorized to manage the property) of the debtor, the creditor of the debtor, other persons in order to prevent the debtor’s bankruptcy by taking organizationally economic, management, investment, technical, financial and economic, legal measures in accordance with the law before the initiation of bankruptcy proceedings.
The main components of pre-trial rehabilitation procedures are:
The written consent of the owner of the property (the authority authorized to manage the property) of the debtor;
the written consent of creditors whose total claims exceed 50 per cent of the debtor’s payables according to his accounting data;
a sanitation plan that must be agreed in writing by all creditors and approved by the general meeting of the debtor’s creditors.
It is important that the pre-trial rehabilitation procedure may not last more than 12 months from the date the court approves the appropriate sanitation plan. Pre-trial rehabilitation is provided by the legislator in order to solve the problem of bankruptcy before the start of the trial in essence.
Stage 2. Initiation of bankruptcy proceedings.
The application for initiation of the bankruptcy proceedings is submitted to the economic court on the whereabouts of the debtor – the legal person or residence of an individual – the entrepreneur by the debtor or creditor in writing. Lenders may be individuals, businesses, institutions, organizations, as well as income and fee bodies and other government bodies with documented requirements for debtor’s monetary obligations.
Within 5 days of the application for bankruptcy, the economic court has the right to:
Accept the application;
Refuse to accept the application;
Return the application without consideration.
Depending on the category, type of activity and availability of the debtor’s property, the economic court applies a general, special or simplified procedure for bankruptcy proceedings.
The general order provides for the application of the procedure of disposing of property, followed by the transition to the procedures of sanitization, liquidation or peace agreement.
The Special Procedure provides for the involvement of additional participants in the case, the extension of the terms of rehabilitation, the coincidence of procedures for the disposal of property and sanitization.
The simplified procedure is applied in the liquidation of the bankrupt without the application of procedures for the disposal of property and sanitization.
In order to identify all creditors, the announcement of the bankruptcy case is officially announced on the official website of the Supreme Economic Court of Ukraine on the Internet.
Lenders are required to file written applications with the requirements of the debtor, as well as documents confirming them, within thirty days of the official publication of the announcement of the initiation of the bankruptcy proceedings.
Stage 3. The procedure of disposing of property (external management).
Simultaneously with the decision to initiate bankruptcy proceedings, the court introduces a procedure for disposing of property or the so-called procedure of external management. This procedure involves overseeing and overseeing the management and disposal of the debtor’s property in order to ensure the safety and efficient use of the debtor’s property, to review its financial situation, and to determine the following best procedure (sanctions, peace agreement or liquidation) to meet the creditors’ demands.
The law of Ukraine “On the restoration of the debtor’s solvency or recognition of his bankruptcy” provides for the procedure of disposing of the debtor’s property – one hundred and fifteen calendar days, which can be extended by the court on a reasoned application, but not more than two months.
The property manager is an independent person who is appointed by the decision of the economic court. Its functions are:
Processing of creditors’ statements about the debtor’s monetary claims;
Maintaining a register of creditors’ claims;
Reporting creditors on the outcome of their claims;
Taking measures to protect the debtor’s property;
economic activity, the investment position of the debtor and its position in the markets, etc.
The purpose of this procedure is to enable the debtor to meet the requirements of all creditors in accordance with the registry in full or in part in the same proportional respect for the requirements of each creditor (at the consent of the creditors’ committee and the steward of the property). Such calculations indicate the restoration of the debtor’s solvency and the economic court stops the bankruptcy proceedings.
In all other cases, the bankruptcy procedure continues.
Stage 4. Sanctioning the debtor.
The Committee of the Debtor’s Creditors has the right to file an application to the court for the introduction of the procedure of rehabilitation for a period of no more than eighteen months.
Sanitation is a system of measures that are carried out during the bankruptcy proceedings in order to prevent the debtor from being declared bankrupt and liquidated, aimed at improving the financial and economic situation of the debtor, as well as satisfying in full or partially the creditors’ demands by restructuring the enterprise, debts and assets and/or changing the organizational form of the debtor.
The administrator of the sanitization is appointed by the economic court among the arbitrators, who are licensed to carry out the activities of the arbitrator, issued by the State Department of Bankruptcy Affairs.
The introduction of the procedure of sanitization is to be made public by publishing on the official website of the Supreme Economic Court of Ukraine on the Internet.
Among the main responsibilities of the manager of the sanitization:
To take into economic management of the debtor’s property and the organization of its inventory;
Opening a special account for sanitization and settlements with creditors;
developing and submitting to the court a plan of remediation, which, taking into account the turn-on
To ensure that creditors’ claims are repaid;
foreclosure in favour of the debtor’s receivables;
conducting an independent assessment of the alienation of property in the procedure of sanitization in accordance with the law, etc.
The main methods of restoring the debtor’s solvency during the rehabilitation may be:
Increase in the debtor’s share capital;
The alienation of the debtor’s property by asset replacement;
Selling part of the debtor’s property;
In the event that the debtor’s solvency has not been restored as a result of special bankruptcy proceedings and payments on his debts have not been made, the economic court declares the debtor bankrupt and opens a liquidation procedure for twelve months.
Stage 5. Recognition of the debtor as bankrupt.
A bankrupt is a debtor who is unable to meet its monetary obligations, as established by an economic court.
For the debtor, the recognition of him as bankrupt leads to the following consequences:
The duration of all the bankrupt’s monetary obligations is considered to have come;
the bankrupt has no additional liabilities (including taxes and fees, other than the costs associated with the liquidation procedure;
the accrual of forfeiture (fine, penalties), interest and other sanctions on all debts of the bankrupt ceases;
information about the financial situation of the bankrupt ceases to be confidential or to constitute trade secrets;
the arrest imposed on the property of the debtor, who has been declared bankrupt, or other restrictions on the disposal of the debtor’s property is cancelled. New arrests or other restrictions on the disposal of bankrupt property are not permitted;
requirements for the liabilities of a debtor declared bankrupt, which arose during bankruptcy proceedings, can be made only within the liquidation procedure within two months of the official publication of the debtor’s declaration of bankruptcy and the opening of the liquidation procedure.
Liquidation procedure in a bankruptcy case is a procedure whose main purpose is to liquidate the bankrupt’s debt by selling the bankrupt’s property and making settlements on its debts.
It is important to remember that the bankruptcy of the enterprise is a complex, multi-stage and long-term procedure, which requires a huge expenditure of effort, time, nerves and, unfortunately, money.
Our law firm takes a professional and comprehensive approach to the liquidation procedure. We try to simplify this complex process for our client in the shortest amount of time and money.