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 Mariam Ghulyan.
– The strategy states that it is necessary to develop and implement professional training programs for Administrators and to organize the training of candidates before passing the qualification. Ms Ghulyan, what extent is this necessary for, will it increase the professional skills of Administrators?
– Any process, which is aimed at deepening the knowledge and skills of administrators, will definitely have a positive impact. In my opinion, the work of administrators is hampered by the fact that many issues in the bankruptcy process do not have legal regulation. There are many important procedural and substantive issues, the settlement of which is given in the legal practice, by judicial acts, situational solutions. To exclude this, all issues should be settled in as much detail as possible.
Moreover, there are many situations when there are conflicting judicial acts on the same issue. For example, in the case of two lawsuits in which the same property is the subject of a pledge to be sold within the proceedings, or how the guarantor’s property should be included in the principal debtor bankruptcy proceedings, the issue of declaring the guarantor bankrupt, and many similar issues.
– Today, the remuneration of administrators is very different due to the number of cases. To solve this problem, it is also proposed to review the system of appointment of bankruptcy administrators and introduce a new software for the selection of administrators, which should take into account a number of factors in selecting an administrator, such as for example, the complexity of the work, the professional skills and the professional area. Do you think the introduction of such software will contribute to a right, perhaps fairer distribution of bankruptcy cases among administrators?
– Naturally, the selection of administrators electronically and their appointment in a specific case has an important, key role in reducing the existing risks in this regard. This will also contribute to raising the prestige of this institute. It is difficult to imagine the complexity of the assessment of the professional skills of an administrator and the appointment of a specific administrator accordingly by a computer program. Hpwever if there is such a possibility from a technical point of view and there will be objective criteria in that choice, I appreciate it.
– The Strategy proposes to make changes in the Constitutional Law “Judicial Code of the Republic of Armenia”, increasing the number of judges of the bankruptcy court. In your opinion, will this contribute to the reduction of the examination time of the cases? How often are court hearings with your participation scheduled?
– I think the increase in the number of judges examining bankruptcy cases will definitely contribute to the reduction of bankruptcy cases, because in reality the workload of judges is really high.
Bankruptcy decision-making deadlines are quite short, and if those deadlines are met by the courts, it will greatly reduce the length of time it takes to hear a case. However, there is another important factor in bankruptcy proceedings, which significantly affects the deadlines. It is a matter of ensuring the notifications of the parties, the delivery of court documents. Violations of the requirement of reasonableness of deadlines occur mainly in cases which raises the issue of notifying the debtor. And in this respect, the work of the postal service, the enforcement service is very important.
– It is mentioned 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. Will this arrangement be effective in practice? What possible problems or difficulties may arise?
– The introduction of electronic systems and the organization of electronic document circulation is imperative of the time. Naturally, its introduction will reduce both costs and time factor. However, there is an essential circumstance here. Various surveys have shown that the percentage of users of electronic resources in Armenia is still quite low. Moreover, if legal entities are to some extent aware of electronic resources, electronic tools used, yet the awareness of individuals is very low.
In other words, in theory, the introduction of the electronic system is very positive, it will definitely be effectively used by administrators and lawyers, but in order to get general use, specific awareness-raising measures must be taken, sit should be developed in such a manner that its use does not violate the rights and legitimate interests of individuals.
– Ms. Ghulyan, Within the framework of the Strategy, it is also envisaged to develop a draft Bankruptcy Code, which stipulates that, for example, it is necessary to reduce the terms of bankruptcy proceedings. How do you imagine this? In practice, how much is it possible to reduce that period and what are the ways to reduce the period and the expected result to achieve?
– I think the terms set by the current legislation are reasonable. It must be ensured that the deadlines set by law are met. The reduction of bankruptcy proceedings by law should take place in parallel with the increase in the number of bankruptcy judges, as most of the existing terms are violated due to the workload of judges. Naturally, in the conditions of reducing the workload of judges, only by law can the latter be obliged to examine the cases in a shorter period of time.
– How would you assess the level of public awareness about the bankruptcy system? If the level of awareness is low, then what steps should be taken in that direction?
– The level of awareness is quite low. Bankruptcy is generally seen as a way to avoid fulfilling obligations.I think it is time that some negative legal consequences in connection with further activities should be defined for persons declared bankrupt, so that it will be possible to exclude bankruptcy proceedings from unscrupulous debtors as a tool to avoid fulfilling their obligations. In fact, in the context of bankruptcy proceedings, the emphasis should be on the financial situation of the person, the restoration of entrepreneurial opportunities, in other words, recovery.
That is, in cases where it is possible, financial recovery and restoration of business should be ensured under the conditions of proper administration under the bankruptcy proceedings.
– What problem do you see in the sphere that may are not included in the judicial reform strategy, but you consider it a priority?
– The task should be to organize the protection of creditors’ rights more effectively. If the case is in bankruptcy, it is already clear that the claims of creditors, as a rule, will not be fully met. There is a situation when a person assumes obligations, after which he/she is interested in going bankrupt, because he/she has enough tools in bankruptcy proceedings to extend the duration of the proceedings as much as possible.
