The Judicial and Legal Reform Strategy 2019-2023 envisages a number of changes in the field of bankruptcy, including amendments to the Law on Bankruptcy. It is also planned to review the requirements for the Bankruptcy Administrators and their appointment procedure.
Iravaban.net talked about the topic to Bankruptcy Administrator Martin Manucharyan.
The strategy states that it is necessary to develop and implement professional training programs for Administrators and to organize the training of candidates before qualifying.
According to the Administrators, such an initiative is welcome, as the field of bankruptcy is quite complex, including in terms of law enforcement, and it will enhance the professional skills of Administrators, as well as the direct involvement of new Administrators in the field of bankruptcy.
Administrators’ salaries today are very different depending on the number of cases. To address this, the Bankruptcy Administrators Appointment System will also be reviewed and a new software for selecting Administrators will be introduced, which will take into account a number of factors when choosing an Administrator, such as case complexity, professional skills and area.
To the question whether the introduction of such software will contribute to a more correct, perhaps fair distribution of bankruptcy cases among the Administrators, Martin Manucharyan said. “The remuneration of Administrators is not really conditioned by the number of cases, but is directly dependent on several circumstances: the satisfaction of creditors’ claims, the number of real or movable property in the case, collateral claims, collection of receivables and other circumstances. As for the review of the bankruptcy administration system and the introduction of a new software for the selection of Administrators, such an initiative is also welcome, but the selection of an Administrator should not depend on any circumstance, but the selection of Administrators, as well as further professional training so that all Administrators are on an equal footing and have the opportunity to choose whether to participate in the draw of this or that case or not. Otherwise, we will organize reforms, but as of now, some of the work will be done by some of the Administrators and the remuneration will be quite high, and the other part will be done by the other Administrators and the remuneration will be quite low, so I think that it is necessary to abolish the institute of nomination of Administrators by creditors or debtors and to distribute cases exclusively through a draw, which will also contribute to the reduction of corruption risks in this area.”
The Judicial Reform Strategy states that the introduction of an electronic bankruptcy system and the implementation of electronic document circulation will also have a positive impact on increasing the efficiency of the bankruptcy court.
The Bankruptcy Administrator notes that any innovation will cause problems in the beginning, but they are purely technical and regulated over time, and the introduction of e-bankruptcy will contribute to transparency and make the work of Administrators much easier, as well as save a lot for both the Administrators and in connection with the use of state resources.
It is also planned to draft a Bankruptcy Code, which stipulates that, for example, the terms of bankruptcy proceedings should be reduced.
To the question how much it is possible to reduce that period in practice and what are the ways to reduce the terms, Martin Manucharyan said. “In order to reduce the terms of bankruptcy proceedings, the RA Law on Bankruptcy, which has been in force since 20 April, 2020, provided for additional bonuses, but it is not always possible to manage the terms and achieve the expected result. In almost 40-50% of cases, the debtor and the property belonging to the debtor are searched, for example, vehicles are often damaged and no legal formalities are made, due to which the searches do not yield results, or the employees of the compulsory service terminate the enforcement proceedings without taking proper actions, stating that the property has not been found, or it is not possible to find the debtors, such circumstances hinder the sale of property without proper notice to discuss, Therefore, the reduction of terms is not realistic.”
According to the expert, the public awareness about the bankruptcy system is quite high and very often, being unscrupulous, they try to get rid of liabilities through bankruptcy, which is worrying.
Martin Manucharyan sees other priority issues in the sphere.
“First, is the independence of the Administrator and the corresponding legislative guarantees, by which Administrators will not be constrained in the proper exercise of their powers.
Second: increasing the role of Administrators in society.
Third: development and implementation of tools to limit the circumvention of bankruptcy proceedings by creditors or third parties during bankruptcy proceedings.
Fourth: possibility of unimpeded access to the apartment, warehouse and other premises in the absence of a creditors or debtors by the Administrator and relevant specialists for inventory and evaluation.
Fifth: replacing the imperative requirement of the Administrator to recover the damage caused to the debtor as a result of transactions, transfers and alienation of property during the three years preceding the declaration of bankruptcy of the debtor with discretion and, as an exception, the decision of the creditors’ general meeting to envisage confiscation by court,” the bankruptcy Administrator mentioned the problems he had collected.
