2) It is necessary to consolidate, in a legislative procedure, the norm stipulating that the actions in bankruptcy against absent debtors initi ated before the enactment of the Law “On Bankruptcy” in 2002, con cerning which no court decisions as to recognizing such debtors as bankrupt have been issued, are to be abated directly in accordance with the Law “On bankruptcy”.
3) It would be advisable to legislatively determine the procedure of liquidation and exclusion of an absent debtor from the register of juridi cal persons in the event when the resources needed to finance the pro cedure of declaring such a debtor bankrupt will eventually not be found.
4) In order to improve legislation on bankruptcy and liquidation of ju ridical persons, as well as to spend more economically the resources of the federal budget, it would be reasonable to basically reconsider the concept of liquidation of idle juridical persons and to make it possible to liquidate them in a simplified procedure.
5) With the purpose of eliminating contradictions between the abovesaid norms of the Law “On bBankruptcy”, it is necessary to amend it, with specific explanations as to whether the norms that regu late mandatory publication of the information concerning bankruptcy extend to the instances of bankruptcy of an absent debtor, and also which period for closing the register of creditors is applicable in the in stance of bankruptcy of an absent debtor.
Eighthly, in order to avoid judicial errors that may arise in the case of bankruptcy of a debtor being liquidated, it would be advisable to amend Article 224 of the Law “On Bankruptcy” by augmenting it with a provision to the effect that a creditor also may have the right to petition the court that the debtor being liquidated be deemed to be bankrupt.
Ninthly, as the practice of bringing to civil, administrative and crimi nal responsibility for violations of bankruptcy legislation has shown, the norms that regulate it, which are consolidated in Article 10 of the Law “On Bankruptcy”, as well as in Article 14.12, 14.13 of the RF Code of Administrative Violations, as well as in Articles 195–of the RF Criminal Code are almost never applied, and therefore it would be feasible to reconsider all the abovesaid norms not on a frag mentary basis, but as essential concepts.
It should also be noted that despite a number of indisputable achievements, the new law is in principle incapable of providing solu tions to a number of cardinal problems existing outside the framework of technical procedures.
Firstly, the granting to the State the same rights as all other creditors enjoy will entail the creation of appropriate infrastructure that would en sure that its interests be adequately represented. It is unlikely that ade quate resources will ever be allocated to this end. Therefore, a few hundreds of enterprises will indeed enjoy an improvement in the devel opment of and the control over bankruptcy procedures, but the majority of others will, more probably, face greater corruption and an interest in the buying up of “the administrative resource”. The latter scenario is quite probable also because it would be the easiest for the State to initi ate the procedure of bankruptcy, there being no need for the State to confirm its claims in court.
Secondly, the tightening of the rules by which bankruptcy proce dures may be initiated will not substantially restrict the processes of property redistribution. This is an objective process, and while it has not been resolved within the framework of the law on joint stock compa nies, it will still go on, this time within the framework of execution of judgment.
Thirdly, when introducing specific principles of insolvency in certain specific sectors, the incentives are created for debts being dumped on these sectors. However, when this is not done, social cost becomes too high. Besides, the issue of placing a given enterprise in the category of “natural monopoly”, or of enterprises forming company towns, or stra tegic enterprises, is also quite controversial.
Fourthly, a considerable portion of the proposals concerning legisla tive reform have resulted not from the imperfection of existing regula tion, but rather from the underdeveloped infrastructure for its applica tion. One of the main problems in this sphere is the dependence of the arbitrage courts on local authorities and the inadequate level of qualifi cation of the judges dealing with complicated economic disputes.
Fifthly, many of the changes in legislation on insolvency have been the consequences of a reestimation of certain problems, and therefore some of the norms contained in the new law on insolvency have been as yet only rarely applied.
According to the EBRD’s estimates, a rapid bankruptcy procedure makes it possible to avoid delays which could be damaging in respect to both the debtor and the creditors, as well as to avoid overloading the judicial system. A most essential goal for the transitional economies of the Central and Eastern Europe and the CIS is to eliminate, in their legislations on bankruptcy, all the norms that may impede the realization of the rights of the debtor and its creditors. Neverthe less, as the available estimations have demonstrated, legislation on bankruptcy procedures in the countries with economies in transition is not as well developed as that regulating other spheres of commercial law. This is especially true in terms of efficient application of this legisla tion. The proceedings in bankruptcy are often protracted and fruitless.
The qualification of nominated external administrators is also question able. Despite the serious steps that have been taken in these countries in recent years toward improving both legislations and their practical application in the sphere of corporate bankruptcies, no dramatic im provement has been seen so far.
Important prospects – although, obviously, realizable in distant fu ture – are associated with improving the judicial practice as a whole. For example, in order to protect enterprises from unfair seizures of control over all or some of their assets by means of applying bank ruptcy procedures, it is necessary to expand the practice of refusal, on the part of judicial agencies, to apply bankruptcy procedures as a rou tine measure of debt redemption. Such actions must be treated as law violations in accordance with Article 10 of the RF Civil Code, and both the transparency of the judicial procedure and the responsibility of the judiciary must be ensured.
Accordingly, more time will be needed for the emergence of an appropriate infrastructure and its adaptation to the new legisla tive norms. Therefore, the possibility of further expansion of the prac tice of bankruptcy of large potentially attractive enterprises may be quite real. Most probably, during that period the controversial influence of bankruptcy on the economic development will become even more obvious. Additional efforts will be required to develop self regulating organizations of bankruptcy commissioners.
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