Sberbank presents proposals for amendment to law on bankruptcy
Vedomosti’s industry conference on the “Institute of Bankruptcy in Russia” was held today, featuring a speech by Yevgeny Akimov, the managing director and head of the Enforced Collection and Bankruptcy Division of the Troubled Assets Department, Sberbank. The session was devoted to the amendments to the law on bankruptcy that will be considered by the State Duma this fall. Also addressing the session were Director of the Department for Corporate Regulation of the Russian Ministry of Economic Development Mikhail Beshtoev, Deputy Commissioner of the FTS Konstantin Chekmyshev, Director of the Fedresurs project Alexei Yukhnin, and representatives of Rosneft and RUSAL.
The conference participants noted the issue of the current state of the bankruptcy market: only 5% of creditor claims are satisfied in bankruptcy proceedings and creditors have lost RUB 12 tn over the past five years, according to the FTS.
Addressing the session, Yevgeny Akimov explained the benefits of the amendments to the law on bankruptcy. They include replacing the nonfunctional monitoring procedure with restructuring, reducing the asset disposal timeline to nine months, and the procedures for allocating liabilities and regulating cost allocation issues for the search and recovery of assets abroad.
Akimov also indicated certain points that concern creditors and could be removed from the draft law without impacting its main provisions.
These points include, inter alia, changing the system for appointing bankruptcy trustees, which may not work. One of Sber’s proposals is to test the new approach on procedures initiated by debtor application, which make up no more than 10% of all bankruptcy cases. Akimov also pointed out the mention in the amendments of granting voting rights for meetings to creditors who have current claims against the debtor. The rule proposed contradicts the global experience – current payments do not vote. The third proposal is to exclude the right of the FTS to establish a lien on debtors’ property based on the results of desk audits. Such an expansion of the FTS’ rights to establish liens could have a negative impact on lending: without FTS claim settlement, banks will be more cautious about lending to companies and individual entrepreneurs. This will also negatively impact other creditors – the FTS will receive the right to impose seizures after any permanent audits (as opposed to the occasional on-site inspection). The FTS will be able to take almost all free property as collateral and will get priority over other secured creditors (not banks). This innovation may have a negative impact on the investment climate in Russia in general.
The amendments to the law on bankruptcy should have passed yesterday. We hope that in the next few months the State Duma will adopt the document at first reading, perhaps even in its entirety. In the bill, the authors laid out the principles that will help more businesses return to normal economic turnover, bankruptcy procedures be carried out more quickly, and creditors have higher repayment levels.
Yevgeny AkimovManaging Director, Head of the Enforced Collection and Bankruptcy Division, Troubled Assets Department, Sberbank