Tishchenko Natalya 
Arbitration manager, managing partner of Nobili Law Firms
World Bankruptcy Standards – Comparison with Ukrainian Legislation
Nothing scares people like going bankrupt, and nothing beckons people like bankruptcy. The only question is what are the goals and what legislation in the country. Recently, the Code of Bankruptcy Procedures was introduced in Ukraine, in the future, to increase the position of our country in the Doing Business rating. The main goal of the new legislation is to make it easier for creditors to return their funds, speed up procedural issues and ensure transparency in the sale of property in bankruptcy. The Code is more aimed at protecting creditors, which is a positive element, because a creditor is a person who has already lost his funds in previous periods and, thanks to bankruptcy, has the opportunity to return them. The Code makes available the process of a debtor entering bankruptcy proceedings. The lender can initiate bankruptcy proceedings in the presence of any amount of debt and without time limits related to non-repayment of debt. This greatly expands the circle of persons who may enter bankruptcy in the near future. In the event of bankruptcy of individuals, the barrier laid down in the Code for many Ukrainian is to-sit high. The conditions are as follows: the size of overdue obligations – at least 30 times the minimum wage; termination of loan repayment or planned payments in the amount of 50 percent of monthly payments under each agreement; availability of a resolution on enforcement proceedings on the absence of property; confirmation of the circumstances that the debtor will not be able to fulfill the monetary obligations. Unlike Ukraine, the American bankruptcy legislation is more aimed at protecting the debtor. The US Bankruptcy Code specifies that only a person under US jurisdiction can be declared bankrupt. The basis for bankruptcy at the time of filing a bankruptcy petition must be an unsecured debt in the amount of USD 250,000, that is, a loan that is not backed by an underlying asset. These are debts on a bank card, health insurance, that is, debts and loans without the requirement of collateral. Or the debtor must be secured by a collateral of $ 750,000. German law allows bankruptcy in the absence of liquidity (inability to pay 90% of debts) and to resolve excessive debt (the volume of the company’s liabilities exceeds the volume of its assets). To start a business, you need 2 years of negative liquidity. But in case of insolvency to pay off his debt to creditors in the future, especially for mandatory payments, the person can apply for liquidation. If we look at the legislation of the Republic of Belarus, we will see that a debtor there may be an insolvent legal entity that is a commercial or non-commercial organization, and insolvent individual entrepreneurs. Individuals, as in most post-Soviet countries, cannot be bankrupt. Ukrainian legislation allows any creditor to be declared bankrupt, and as for an individual – only to the debtor himself. In America, both the debtor and the creditor can initiate bankruptcy. It is more profitable for the debtor to start bankruptcy, because he can retain part of the property for himself. The law is made in such a way that someone at a certain point in their credit difficulties can initiate bankruptcy – in order to start “living again”. In most cases, the funds received are not enough to repay the entire loan, so the lender is almost always at a loss. If a bankrupt tried to hide his property from a court representative or the fact that he wants to become a fictitious bankrupt is revealed, this is a guarantee that this person will be put on trial, since the criminal law has been violated.
So, in the United States, the bankruptcy procedure is regulated not only by the bankruptcy code, but also by the criminal law. Both documents state that the debtor is responsible for deceiving the creditor, therefore, he may lose all his property. And if the deception is proven, then he may incur a more serious punishment – imprisonment. The Criminal Code of Ukraine provides for criminal prosecution for bringing to bankruptcy, but judging by the practice in relation to legal entities, cases are closed due to a limitation period or lack of a proper evidence base. Time and practice will show what will happen to individuals, but the situation is unlikely to change significantly. The new norms of Ukrainian legislation strengthen the responsibility of the founders of a legal entity and the debtor’s management for timely settlements with creditors, regulating the provisions on subsidiary and joint liability. The Code also contains provisions on the obligation of the debtor to apply to the economic court with an application to open proceedings in the case within a month, if the satisfaction of the claims of one or several creditors will lead to the impossibility of fulfilling the debtor’s monetary obligations in full to other creditors (threat of insolvency). The Code establishes a monthly period and liability for failure to fulfill such an obligation, namely: if the debtor’s manager has violated these requirements, he is jointly and severally liable for failure to satisfy the creditors’ claims. If in Germany it turns out that the debtor has submitted false information to the bankruptcy commissioner or withheld information regarding the property, then he is prosecuted under criminal law. It is not difficult to predict a large number of criminal cases against legal entities and individuals in Ukraine. But they are unlikely to be effective and end with sentences. To conduct bankruptcy procedures for individuals in the United States, the US Department of Justice created a special body – the Executive Bureau. This agency is committed to appointing federal governors for each case. It can be either one person or a group, depending on the specifics of the case and its complexity. The executive is from the Executive Office and manages the entire process of the bankruptcy proceedings. The insolvency lawsuit is considered by the local bankruptcy court. A novelty of the Ukrainian Code was the creation of a single self-regulatory organization – the National Association of Insolvency Managers of Ukraine, of which every insolvency administrator becomes a member from the date of entering information about him in the Unified Register of Arbitration Managers of Ukraine. The bankruptcy administrator is appointed by the court at the stage of disposing of property for the bankruptcy of legal entities or performing the management of the duties of a restructuring administrator for individuals. This determination is carried out by automated selection using the Unified Judicial Information and Telecommunication System, from among the arbitration administrators included in the Unified Register of Arbitration Administrators of Ukraine, according to the principle of random selection. The system selects three candidates – if the first one does not confirm his desire to participate in the case, the next one is appointed. In the Republic of Belarus, the situation with bankruptcy commissioners is different. They are called temporary (anti-crisis) managers. Such managers can be individual entrepreneurs, legal entities or individuals. It is interesting that the managers can be citizens of the Republic of Belarus, foreign citizens and stateless persons who have a witness for residence. All managers must meet professional qualification criteria and have an appropriate manager’s certificate of category “A”, “B” or “C”. \ It is interesting in the Republic of Belarus that a person cannot be a manager in more than one economic insolvency proceedings (bankruptcy), with the exception of proceedings in cases of economic insolvency (bankruptcy) of absent debtors, individual entrepreneurs, as well as debtors in respect of whom a decision on liquidation (termination of activity) was made in accordance with the established procedure. Remuneration to managers in the Republic of Belarus is paid in the form of direct remuneration or salary. It all depends on the category and nature of the case. Control over the correct payment of remuneration and wages is carried out by the state.
In Germany, there are similarities with our legislation – the arbitration manager can be a lawyer, a certified auditor and a certified accountant. The decision on the appointment is also made by the court. But in Ukraine, the career of an insolvency administrator begins with the receipt of the relevant authorization document in the form of a certificate, and in Germany – from the first appointment in the case. For his work, the German insolvency administrator receives a percentage of the proceeds from the sale of any property of the debtor. The Ukrainian arbitration manager receives the main remuneration in the amount of at least 3 minimum wages and an additional one (3% of the amount of extinguished claims and 5% of the value of the property returned to the liquidation estate). auction. In Germany, however, most assets are transferred to creditors as collateral for debt. In Ukraine, such an opportunity has also been introduced, but only for secured creditors. There is no obligation to sell through an auction, sales can take place not only at online auctions, there is no single platform. Almost all countries allow the conclusion of an amicable agreement in bankruptcy proceedings. The Ukrainian legislator has ruled out this possibility, although practice already shows that it is a necessary element of bankruptcy. Hopefully, this provision will soon be included in the Code of bankruptcy procedures.
The full version of the journal can be found on the website https://femida.ua/ or by the link: https://femida.ua/wp-content/uploads/2020 /03/femida-2020-online_1-kopyya-stysnuto.pdf