February 18-21, 2010 – More than one hundred experts on bankruptcy participated in the conference dedicated to the tenth anniversary of the Law “On Restoring Solvency or Declaring Debtor Bankrupt”. The key subject for discussion at the conference was introduction of the best international bankruptcy practice in Ukraine. This means cutting the cost and the length of the bankruptcy procedure, ensuring effective recovery rate for creditors as well as putting in place an efficient bankruptcy procedure to give a chance to potentially good companies to restore solvency.
“Bankruptcy is one of the most important elements of business climate. By establishing transparent bankruptcy regulation and preventing inefficient use of assets we could make Ukraine more congenial to international investors. For this very reason International Financial Corporation (IFC) provides advisory services to the government on how to improve the bankruptcy procedure”, says Sanzhar Ibragimov, Manager at IFC, World Bank Group.
As a result, the conference participants mostly focused on the discussion of the new Law on Restoring Solvency presented by the members of the working group who developed the new draft law. “The existing Law on Bankruptcy does not allow us to efficiently settle debt problems, make payments to creditors and find a new efficient owner. The new law is designed to strike the right balance between effective protection for creditors and effective mechanisms for debtors to restore solvency”, says Vadim Samoilenko, a partner at Asters Law Firm and a member of the working group.
During 2009 the working group comprising of lawyers, judges, court-appointed trustees, officials and representatives of private and public companies studied the current situation with the bankruptcy in Ukraine and the international bankruptcy practice. “We discussed the existing problems for each procedure in the existing law and took them into account when making the new draft law. As a result, we have a completely new law, which is expected to keep up with the contemporary trends, eliminate gaps and relation problems, reduce abuses, speed up the bankruptcy procedure and make it more transparent”, says a member of the working group Andrey Shvydkin, a judge of Kharkiv Commercial Court.
The role of court-appointed trustees in the bankruptcy procedure was a separate motion discussed during the round table. “This is a very important issue to regulate the activity of the court-appointed trustees as they are responsible for effective enforcement of the bankruptcy regulations and formation of the reputation of the insolvency institute in Ukraine. The new Law suggests changes in the system of regulation of the court-appointed trustees’ activity through creation of self-regulating organizations. This will help withdraw unqualified participants from the market and allows us to increase responsibility of the court-appointed trustees”, said Pavel Mikhailidi, the Chairman of the Crisis-Managers Union of Ukraine.
All panelists were unanimous in the opinion that creation of self-regulating organization is a natural way of development of the profession of court-appointed trustees. The key issue is to choose the right model of self regulation, which will meet the realities of Ukraine’s economic standing. “When developing the new Law on bankruptcy the working group followed a clear principle: self-regulation is a kind of private public partnership in the area of legislation. The risks bearing by the parties depend on how efficiently the partners control them”, said Yana Bugrimova, a partner at Prudence Law Firm. Senior Manager of the Foundation for Effective Governance Andrey Lobach agrees with her opinion: “Implementation of self regulation is an inevitable process. Still, judging by the experience so far, we can see that irrespective of the model it is necessary to find the right balance between the role of state and self regulating organizations”.
Foundation for Effective Governance
The Foundation for Effective Governance (FEG) was formed in 2007 by Ukrainian businessman Rinat Akhmetov. FEG's main objective is to encourage the development of long-term national economic programs for Ukraine, and to hold open discussions with the civil society on the challenges facing the country.
The Foundation for Effective Governance (FEG) is an independent public policy institution, which serves the interests of all citizens. To achieve the objective the Foundation involves the leading Ukrainian and international experts with impeccable reputation. The International Advisory Board, which includes prominent public and political figures from different countries, ensures the Foundation’s independence. Among its board members are former Canadian Prime Minister Kim Campbell; former U.S. Senator Lincoln Chafee; former president of the National Bank of Hungary György Surányi; former President of the Spanish Constitutional Court Pedro Cruz Villalon and others.
The Foundation follows a practice-oriented approach and works with all political forces and state institutions when developing and implementing the projects and programs.
One of the key FEG’s principles is bringing world best practices to Ukraine. This is why FEG implements each project in partnership with such international organizations as McKinsey, Monitor Group, World Economic Forum, Intelligence Squared, and in close cooperation with the World Bank, International Monetary Fund and International Financial Corporation.
FEG believes that reform of the bankruptcy procedure is one of the seven priority objectives for Ukraine in 2010. Among other objectives are: reform of the banking system, adoption of the Tax Code, simplification of the regulatory framework, creation of the farmland market, formation of the public-private partnership system and reform of state administration.