Pages:     | 1 |   ...   | 39 | 40 || 42 | 43 |   ...   | 44 |

during one year the State received six times more money than through out the whole period during which the previous version of the Law was in effect, while the repayment of debts increased from 20 to 60%, and there was also a considerable decline in the number of orchestrated bankruptcies266.

The general trends in legislation modification Some promising, though apparently remote prospects can be asso ciated with the upgrading of judicial practice in general. For example, in order to protect enterprises from any illegal seizure of control over them (or some of their assets) by means of bankruptcy procedures, it is nec essary to extend the practice when judicial instances do not apply bank ruptcy procedures as a regular instrument designed to achieve debt repayment. Such actions ought to be recognized as law violations in accordance with Article 10 of the RF Civil Code, from which follows the necessity to ensure the transparency of judicial procedures and the re sponsibility on the part of judges.

In the nearest future it will be necessary to modify the adopted norms in the following three aspects:

1) It is possible to characterize the provisions of the new Law on bankruptcy, which stipulate that, with respect to the demands concern ing mandatory payments, the State shall acquire a constituent power equal to that enjoyed by creditors in bankruptcy, but as regards the sat isfaction of demands, the former shall be in the same priority (third) as the latter, as generally reasonable. Moreover, as regards the demands concerning mandatory payments, the State has acquired the right to An interview with Chairman of the Committee for Prperty of the State Duma of the RF Federal Assembly V. S. Pleskachevskii. Upravleniie sobsyvennostiu, 2004, No. 1, p. 3.

participate in the conclusion of an amicable settlement. Nevertheless, this approach is not free from some considerable drawbacks, either.

Firstly, unless the institution of representatives of the State is signifi cantly extended in respect to bankruptcy procedures, there will occur a sharp increase in the risk of corruption growth, owing to the trade in government voices in the course of decision making at the meetings of creditors, and also in the risk of intensifying the activity of local authori ties aimed at carrying out covert nationalization and property redistribu tion in favor of third parties. As regards the States participation in the bankruptcy procedures involving economically or socially important en terprises, it seems equally desirable to envisage the establishment of a Board of authorized representatives of the State intended to guarantee a balanced representation of various interests of the State.

Secondly, the State's direct participation in an amicable settlement can considerably increase the risk of an unequal approach to different enterprises. It is necessary to legislatively determine at least the framework conditions on which the State can agree to an amicable set tlement. Apparently, it will require the introduction of alterations and amendments to the Tax and Budget Codes.

3) The principles on which the State (its control bodies) bases its decision as to whether to initiate proceedings in bankruptcy are not transparent for both the market participants and the control bodies.

Given the absence of any criteria for delimiting the range of enterprises in respect of which it is inexpedient for the State to implement bank ruptcy procedures, the actions of individual executive bodies of state authority can be characterized as opportunistic and suffering from lack of system when the proceedings in bankruptcy are initiated against a debtor enterprise. Under these conditions, the institution of bankruptcy, on the one hand, loses its role of an instrument stimulating the enter prises to timely settle budgetary payments, while on the other, it signifi cantly increases the risks involved, due to the unpredictability typical of the application of bankruptcy procedures against individual enterprises.

Moreover, the absence, in actual practice, of any criteria regarding the initiation of proceedings in bankruptcy by the State leads to the substi tution of state regulation by a regulation carried out by individual offi cials, thus extending the basis for corruption on the part of the state apparatus.

Given the fact that the very criteria for the initiation of bankruptcy procedures have undergone no essential changes, and the State is still capable of filing claims against a substantial proportion of medium size and large industrial enterprises, it is extremely important for the State to develop its own criteria for the initiation of bankruptcy of debtor enter prises, so that only a limited proportion of industrial enterprises will be affected by the process, thus permitting these criteria to be applied in actual practice without any reservations.

3) The problem of reciprocal indebtedness of the State to enter prises, for example, under a state order, still to a certain degree re mains unsolved. In some instances, this became the reason for the emergence of the enterprises arrears of payments to the budgets.

When concluding a contract of operating under a state order, an en terprise enters into equal civil law relations with the customer, that is, the State, thus bearing the burden of responsibility when incorrectly estimating the risks associated with non fulfillment of the contract by the customer. However, the enterprise is not always free in its choice:

e.g., in accordance with the Law on the State Defense Order, in the event when there are no candidates for participating in a tender for the placement of a military order, or when no head contractor has been de termined by the results of such a tender, the defense order becomes mandatory for state unitary enterprises, as well as for other organiza tions that are dominating the commodities market or have a monopoly on performing works necessary to implement this defense order.

Moreover, the entering in a state contract designed to maintain mobili zation capacities is mandatory for all organizations, if the fulfillment of such a contract does not entail any losses. The latter stipulation is purely formal, because the contracts terms, while being initially profit able, later may remain unfulfilled, which happens fairly often.

This problem has not been solved within the framework of the new law on insolvency, either. It seems feasible to augment it by provisions stipulating that authorized bodies or local authorities may not file a creditors petition to the arbitrage court on behalf of the Russian Fed eration, the Russian Federations subject, or a municipal formation in the event when the debtor has debit indebtedness to the budget of the Russian Federation, the budget of the Russian Federations subject, or the budget of a municipal formation under a state or municipal order, and the difference between the amount of the debtors liabilities to a budget in question and the said debit indebtedness does not exceed an established margin. At the same time, this stipulation would be reason able only if the obligations pertaining to interbudgetary relations are executed in full, otherwise conflicts become inevitable, in the course of which local authorities will maintain that they have been deprived of any possibilities to settle their debts to the enterprise because of delayed and/or incomplete transfers from the federal budget.

4) The procedures of rehabilitation of debtors envisaged by the law have proven to be of very low efficiency. In this connection it can be noted that the new law on insolvency has substantially expanded the set of available instruments, as well as improved their quality and protec tion from misuse. However, there remains a number of problems that are worthy of noting.

Firstly, the necessity for the State to participate in bankruptcy pro cedures considerably distorts the motivations by which each involved party is guided. Therefore, appropriate measures should be envisaged that would help to regulate the outstanding debts of enterprises against their payments to the budgets and other mandatory payments outside bankruptcy procedures. The mechanisms of debt restructuring appear to be efficient enough for this purpose; however, the incentives for ap plying the restructuring procedure are not equally strong for all the shareholders (owners) of an enterprise. In fact, the decision concerning restructuring at the level of an enterprise may be vetoed by minority shareholders. Also, if at some later stage the State does initiate a bank ruptcy procedure, all shareholders will be placed under equal condi tions. So, it appears important to set different rights during bankruptcy procedures for shareholders voting for and against debt restructur ing.

Secondly, the new law on insolvency, just as the previous one, con tains the norms of pre trial reorganization that have never yet worked in actual practice (Article 31). The absence, within the framework of the new law on insolvency, of any mentioning of the necessity for the State to envisage appropriate items of expenditure in the federal budget does not mean that these must not be previously determined in the budget.

Thus, there emerge the tasks of estimating the minimum amount of ex penditures to be envisaged in the budgets for financing pre trial reor ganizations and including such expenditures in the draft budget. Be sides, it is necessary to single out the limited set of those enterprises in respect to which, in the event of an unfavorable situation, the State will resort to pre trial reorganization, and (most importantly) to preliminarily determine the necessary content of the debtors liabilities to the State within the framework of pre trial reorganization.

Thirdly, the new law on insolvency has introduced a new bankruptcy procedure financial recovery (Chapter 5, Articles 7692). This proce dure can become an important instrument for reorganizing and reform ing an enterprise under its owners control (including the State, as a shareholder). At the same time, attention should be paid to the fact that this procedure may be initiated by the arbitrage court without the credi tors consent (Items 2 and 3 of Article 75, Item 1 of Article 80). How ever, the plan of financial recovery and the schedule of debt repayment prepared by the debtors owners are to be approved by the creditors meeting. It is necessary to fill the following important gap in the law:

what are the solutions available in the event of the creditors meetings refusal to approve the plan of financial recovery (which can be quite probable if the creditors meeting is opposed to initiating this proce dure).

Fourthly, it is necessary to remove the contradictions between the provisions in Chapter 5 (e.g., Items 1 and 2 of Article 77) and the norms contained in corporate legislation (in particular, the provisions of the Federal Law On Joint Stock Companies) designed to protect the in terests of minority shareholders.

Fifthly, one of sufficiently efficient mechanisms for preserving the business activity of large enterprises of economic and social impor tance could become the exchange, during the implementation of bank ruptcy procedures, of an enterprises debts for shares being trans ferred to the creditors. The previous Law on bankruptcy did not contain any provisions concerning additional issues of shares. Nevertheless, this mechanism was applied in practice, and in some instances the shares of a newly created enterprise (which absorbed debt free assets of the debtor) were transferred to the creditors, whereas in others the latter received the shares of an additional issue emitted by the debtor.

In accordance with the new law on insolvency (in the part that regu lates the new issues of shares during external administration), share holders have the right of priority when purchasing the newly placed shares; the placement is made only by close subscription; the addition ally issued shares can be paid for only by money. Thus, the situations when the State is one of the shareholders have not been given due at tention. On the one hand, there exist legislative restrictions to the dis persion of the States stake during a new issue of shares. On the other, the State, due to the peculiarities of its status as a legal subject, cannot be duly efficient in making use of its (shareholders) propriety right to purchase additional shares the period during which shareholders may execute their propriety right to purchase the shares of an additional is sue cannot exceed 45 days from the date on which their placement has begun. As a result, this form of business rehabilitation may be found inefficient in respect to the enterprises in the public sector.

Sixthly, one of the provisions of the new Law on bankruptcy concern ing the sale of strategic enterprises during the implementation of bank ruptcy procedures is especially noteworthy: in accordance with Item of Article 195 of the new Law, the creditors in bankruptcy and their af filiated persons may not participate in bidding. This provision, while be ing reasonable in its essence, in specifically Russian situations may give rise to some serious problems when large enterprises go bankrupt.

Under the conditions characterized by a well developed actual af filiation of the financial structures (including through industrial enter prises), by a high level of concentration of financial resources, and by the presence of large debtor enterprises with numerous different credi tors, the range of potential financially prosperous buyers may become quite limited. This can be fraught not only with losses to creditors (in cluding the State, as one of the creditors) when an enterprise is sold at a reduced price, but also with a possible transition (when it is impossi ble to sell an enterprise as a whole entity) to sales of the enterprises separate assets. Besides, the process of discovering the affiliation of different persons may become very difficult, quarrelsome and time consuming, as the practice of the antimonopoly agencies has shown.

This creates still more opportunities for corruption and voluntarism and for disputes arising after the completion of bankruptcy procedures.

At the same time, if the State effectively applies its right (in accor dance with the new law) of priority purchase when strategic enterprises are sold, the risks discussed above will become less important.

Pages:     | 1 |   ...   | 39 | 40 || 42 | 43 |   ...   | 44 |

2011 www.dissers.ru -

, .
, , , , 1-2 .