The president finally signed the Code of Bankruptcy Procedure, adopted in October 2018, which has several significant innovationsю For the first time in Ukraine, a bankruptcy system for individuals was introduced, and the bankruptcy procedure for legal entities was significantly changed.
The Code establishes joint liability of the debtor’s manager, if this manager understood that the enterprise could not cover the claims of one or more lenders and did not apply within one month to an economic court with a statement on the bankruptcy case opening. A manager is actually obliged to inform the court about the risk of bankruptcy of an enterprise. In case of default, they will share joint liability for the debts with the enterprise. Such a rule will make managers care of companie’s debts and increase guarantees of the creditors’ rights.
All property claims will be filed within a bankruptcy case with the participation of a debtor. This will enable effective judicial control over the return of the property assets of a debtor at their disposal in order either to restore the debtor’s solvency or to form the liquidation mass.
There are clear grounds for suspending arbitrators’ activities by their application. Suspension can occur due to a statement of an arbitration manager and a request of the bankruptcy procedure participants. It is carried out by a commercial court. In addition, it is also possible on the initiative of the court. In all cases except arbitration manager’s own initiative, the suspension of an arbitrator is carried out in the following situations:
1) failure or improper performance of duties entrusted to an arbitrator;
2) abuse of the arbitrator’s rights;
3) submission of false information to the court;
4) not granting an arbitrator the access to state secrets or canceling of the previously granted access;
5) termination of the arbitration manager’s activity;
6) a conflict of interest.
The creditors’ committee has the right to apply to a commercial court at any time with a petition for the suspension of an arbitrator regardless of reasons.
Payment for the services of an arbitration manager will be an applicant’s advance payment to the deposit account of an economic court which is processing the case. This must happen before the date of filling out an application to open a bankruptcy proceeding. This kind of innovation will encourage arbitration managers to properly fulfill their duties and guarantee the payment for their services.
Equally important is the fact that the arrest of a debtor’s property against whom a bankruptcy case can be imposed solely by a decision of an economic court. This can be done within a bankruptcy case and will facilitate the concentration of the debtor’s property for obligations settlement.
In general, the Code significantly changes the rules of the game in the bankruptcy procedure, but the feasibility of these changes will be assessed only after getting more experience after the Code is put into effect on 21.10.2019.