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Recognizing business entities bankrupt
If a business entity is not able to fulfill its
monetary obligations in due time with regard to other parties, a territorial
community or the state, in any way other than through restoration of its
solvency, this entity (the Debtor) shall be recognized insolvent.
A debtor's incapability to restore its solvency
and satisfy the creditors' claims in any way other than through application of
the liquidation procedure by court shall be deemed as bankruptcy.
Subject to bankruptcy (further referred to as
the Bankrupt) may be only a business entity. Government-owned enterprises or
separated units of business entities cannot be recognized bankrupt.
With regard to state-owned commercial
enterprises, the law envisages additional requirements and guarantees of the
Ukrainian people's ownership rights.
Creditors of Insolvent Debtors
Creditors of insolvent debtors are entities
specified in Clause 1 of Article 209 of this Code having legislatively
confirmed claims to the debtor on monetary obligations, including the creditors
whose claims are fully or partially guaranteed by a pledge. Authorities in
charge of collection of taxes (mandatory payments) determined by law shall have
the rights similar to those of creditors.
If two or more creditors have claims to one
debtor simultaneously, they form a creditors' assembly (creditors' committee)
in accordance with law.
Founders (participants) of a business entity,
property owners, state authorities and local governments having economic
competence shall take timely actions their competence in order to prevent
bankruptcy of the business entity.
When taking actions to prevent bankruptcy, the
property owners of a state-owned (communally-owned) or private enterprise,
founders (participants) of a business entity/ insolvent debtor, creditors or
other persons may provide the said entity with financial support in the amount
sufficient to satisfy the creditors' claims, including payment of taxes and
duties (mandatory payments) and restoring its solvency (pre-court
reorganization).
Financial support of a debtor envisages
undertaking the relevant obligations before the persons providing such support
in accordance with the procedure established by law.
The pre-court reorganization of state-owned
enterprises shall be exercised at the budget cost in the amount determined by
the Law on the State Budget of Ukraine. Conditions of the pre-court
reorganization of state-owned enterprises at the cost of other funding sources
shall be coordinated with the authority having economic competence with regard
to the debtor in accordance with the procedure established by the Cabinet of
Ministers of Ukraine.
Procedures Applied to Insolvent Debtors
In the cases envisaged by law, the following
procedures shall be applied to insolvent debtors:
disposal of the debtor's property;
amicable agreement;
reorganization (restoration of solvency) of a
debtor; and
liquidation of a bankrupt.
Debtor reorganization or liquidation of a
bankrupt shall be exercised in accordance with antimonopoly and competition
legislation.
Starting on the day when the decision is made
to initiate the bankruptcy procedure, reorganization of the debtor legal entity
by its owner (authorized body) and transfer of the debtor's property to the
authorized capital stock shall be allowed only in cases and in accordance with
the procedure envisaged by law.
Property Assets of an Insolvent Debtor
In order to regulate the debts of the insolvent
debtor the property assets belonging to the debtor on the basis of the tangible
property rights, right in personam, and intellectual ownership rights shall be
used.
The bankruptcy estate shall include property
assets of the persons liable for the obligations of the insolvent debtor in
accordance with law or the debtor's constituent documents.
Responsibility for Violation of Bankruptcy Legislation
In cases envisaged by law, a business
entity/debtor, its founders (participants), property owner and other persons
shall have legal responsibility for violation of bankruptcy legislation, such
as fictitious bankruptcy, concealed bankruptcy or intentional actions aimed at
bankruptcy.
Fictitious bankruptcy is a knowingly false
application by a business entity to court stating incapability to fulfill
obligations to the creditors and the state. Having verified the fact of
fictitious bankruptcy, that is, actual solvency of the debtor, the court shall
reject the debtor's application for bankruptcy and apply the sanctions envisaged
by law.
Intentional bankruptcy is the stable insolvency
of a business entity caused by purposeful actions by the property owner or the
officer of a business entity, if this caused material damages to the interests
of the state, society or the creditors, which are protected by law.
Concealed bankruptcy, fictitious bankruptcy or
intentional bankruptcy, as well as illegal actions as part of insolvency
procedures related to disposal of the debtor's property that caused
material damages to the interests of creditors and the
state, shall entail criminal responsibility in accordance with law.
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