Lawyer, Head of Judicial Practice of NOBILI Law Firm Meshe Oleksiy
Arbitration trustee in the debt restructuring procedure
An individual’s debt restructuring procedure is one of the court procedures used to restore the debtor’s solvency by changing the manner and procedure of fulfilling its obligations in accordance with the debt restructuring plan.
When the debt restructuring procedure is introduced, the commercial court appoints an arbitration trustee – the restructuring trustee.
The arbitral trustee in the case of insolvency of an individual enjoys all the rights of the arbitral trustee in accordance with the law, including the right to:
- Request and receive documents or their copies from legal entities, public authorities, local governments and individuals with their consent on the property of the debtor – an individual, including those containing confidential information and / or banking secrecy.
- Obtain information from state registers, including credit bureaus.
- To inspect the property of an individual.
- Receive information on the movement of funds on the accounts of individuals.
To ensure the performance of the powers of the individual restructuring manager, the arbitral trustee may engage other persons and specialized organizations on a contractual basis to pay for their activities at the expense of the individual, and in the absence of funds from the latter – based on the decision of creditors’ meetings.
Permission to involve such persons is granted by the commercial court on the basis of a reasoned statement of the arbitral trustee on the need for their participation in the case, which indicates the amount of payment for their services.
In the debt restructuring procedure and depending on the participation of the restructuring manager in the implementation of the restructuring plan, such an arbitral trustee may perform certain functions and have certain powers, namely:
- Organize the identification and compilation of a description of the property of an individual and an inventory.
- Determines the value of the property of an individual.
- Participates in the development of the debt restructuring plan of an individual and performs functions aimed at its consideration and approval by the meeting of creditors and the court.
- Informs creditors about the place and time of creditors’ meetings and holds such meetings.
- In case of sale of property – opens a special account for settlements with creditors.
- Carries out repayment of creditors’ claims in accordance with the restructuring plan at the expense of funds received from the sale of such property.
- Reports to the commercial court and creditors’ meetings on the results of the sale of property of an individual.
- Performing functions of management and disposal of property of an individual.
The powers of the restructuring manager depend on his role in the approved restructuring plan and may differ in each case.
In case of removal of the arbitral trustee from office, banks that have opened a special account for settlements with creditors are obliged to transfer funds from such account to the account of a new arbitration trustee appointed by the commercial court to perform the restructuring trustee.
It is also worth noting that the restructuring manager receives a reward for exercising his powers. The amount of the basic monetary remuneration of the arbitration trustee for the performance of the powers of the restructuring manager shall be five subsistence minimum for able-bodied persons for each month of performance of the arbitration manager’s powers.
Payment of the basic remuneration of the arbitral trustee for the performance of his powers of restructuring manager shall be made at the expense of funds advanced by the applicant to the deposit account of the commercial court hearing the case until the application for resumption of proceedings.
Creditors have the right to set an additional fee to the arbitration trustee at their own expense.
Meshe Alexey
Lawyer, head of judicial practice
NOBILI Law Firm