Bankruptcy Legislation Research Articles

Wirtschaftlicher Wandel in der Tschechoslowakei der Zwischenkriegszeit

Czechoslovakia was founded on October 28th, 1918, when the National Committee adopted the Act on the Establishment of an Independent Czechoslovak State (Act No. 11/1918 Coll.). This law established the reception of the existing Austro‐Hungarian legal system that thus formed the legal system of the new republic (legal dualism). In Bohemia and Moravia (briefly also in the Hlučín Region) the law of Cisleithania, and in the rest of the republic the law of the Lands of the Crown of Saint Stephen, applied. The Czechoslovak government had to solve a number of economic problems. In 1919, the threatening financial crisis was averted by the country’s first minister of finance, Alois Rašín, who initiated a monetary separation that resulted in the adoption of a separate currency. A relatively extensive land reform took place from 1922. The first estates to be confiscated and partitioned were those belonging to the German and Hungarian aristocracy; those who benefited were Czech and Slovak farmers. Also, nostrification took place, the aim of which was to transfer the headquarters and management of businesses to the Czechoslovak Republic. As a result of the take‐over of the legal system, the legal regulation of commercial law was different both in terms of content and language in the two parts of the country. In the legislative area, efforts had been made to unify and at the same time to modernize the legal order across the most important areas of law. In the field of commercial law, the preparation of a new codification was based on the Austrian codification of 1863 and the Hungarian codification of 1875. The preparation was subject to the Ministry of Justice and the Ministry of Unification, which set up expert commissions that developed the Draft Commercial Code. The course of the codification preparation process is further analyzed in the text, and attention is paid to the content of the individual codification proposals. A draft published in 1937 by the Ministry of Justice entitled ʺDraft of the Commercial Codeʺ contained the first (Merchants) and second book (Companies) and had 236 sections. Unlike the then valid Czechoslovak Commercial Act that was based on a mixed system, the Draft of the new Commercial Code was based on a subjective system, on which the German Commercial Code was also based. Unfortunately, this proposal was not adopted by the legislator and remained only in the preparatory phase. One of the reasons was the wait for the adoption of the Draft Civil Code, which did not occur as a result of the German occupation. In the interwar period, therefore, some partial norms were adopted, which unified important areas of commercial law. This included Act No. 259/1924 Coll. (Trade Licensing Act for the territory of Slovakia and Carpathian Ruthenia) on the basis of which the regulations of the former Austrian Trade Licensing Code were used with appropriate adaptation to the conditions in this territory. The other acts were the Bill of Exchange Act (Act No. 1/1928 Coll.), Act No. 145/1934 Coll. on insurance policy, and Act No. 147/1934 Coll. on securing the claims of policyholders in private insurance and on state supervision over private insurance companies. Another important law concerning state intervention in the economic area was the Act against Unfair Competition in 1927 (Act No. 111/1927 Coll.). The complex conditions of the receding economic crisis had created the need for bankruptcy legislation (Act. No. 64/1931 Coll.) and an amendment to procedural law (Act No. 1/1933 Coll.).

On Individual Repayment in Personal Bankruptcy

The repayment of debts is the obligation of the debtor, but the repayment of individual debts before bankruptcy may be deemed to be revocable. Its purpose is to protect the debtor from malicious transfer of property in bankruptcy, and avoid the creditor's right to equal compensation due to the debtor's biased liquidation behavior. At the same time, however, some seemingly revocable acts and repayment acts in the danger period can be exempted from revocation. If the debt is repaid, the debtor's property will benefit and the debtor's life will be necessary. The situation that conforms to the basic principles and requirements of the personal bankruptcy legislation system is a supplement to the personal bankruptcy cancellation system, so as to achieve the balance of interests between individual creditors and other creditors who have not yet been repaid, and ensure that all creditors can pay their debts fairly.

MODEL OF PROCEDURAL COORDINATION IN CASE OF INSOLVENCY (BANKRUPTCY) OF AN ENTERPRISE GROUP

Abstract: there are no rules on the insolvency of erprise groups in Russian bankruptcy law. Traditional and generally accepted is the principle of “one debtor – one procedure”, which corresponds to the principle of isolation and autonomy of each legal entity. This approach does not correspond to the current economic environment, in which there are a large number of interconnected companies that form enterprise groups. This leads to an increasing number of problems in the bankruptcy sector, namely, to an increase in the number of insolvency cases of legal entities with a constant decrease in the percentage of satisfaction of creditors’ claims. In this regard, opinions are expressed about the need to introduce the regime of bankruptcy of enterprise group into Russian legislation. The purpose of this article is to study the enterprise group insolvency model, namely the procedural coordination model. The article provides a comprehensive analysis of procedural coordination and conducts a comparative legal study of those legislations in which this model is already used. The conclusion is made about the expediency of using the procedural coordination model instead of the substantive consolidation model and the need to introduce into the Russian bankruptcy legislation rules that fix the insolvency regime of debtors – members of an enterprise group.

Coronomics, Financial support for the Economy and its Zombie-ing (In the Context of the Fifth Factor of Production)

The paper examines the impact of the COVID-19 pandemic on the economy and the corresponding atypical economic crisis, the role of the economic ability of the government during this crisis, aspects of financial support for the economy and the peculiarities of the zombie economy. The aim of the study is to research the actions of the economic ability of the government as an independent factor of production in the context of the COVID-19 pandemic, contributing to the unfolding of the process of zombie-ing the economy. The research uses the methods of deduction and induction, analysis and synthesis, analogy and abstraction. The special functions of the government are considered within the context of the economic crisis caused by the COVID-19 pandemic; particularly, we refer to the recognition of the fifth factor of production of the economic ability of the government. The main features of this atypical crisis are characterized. It is shown that the process of deglobalization during the COVID-19 pandemic characterizes the deglobalization of the economic ability of the government and that this process is temporary, since overcoming the global phenomenon of the pandemic and the economic crisis caused by it requires exclusively global efforts and measures. Particular attention is focused on the financial support of the economy from the economic ability of the government within the context of this economic crisis. The conclusion is that this support contributes to the process of zombie-ing the economy which took on a global character during the global financial and economic crisis of 2007–2009 and continued after its completion. Zombie-ing the economy is the result of a conflict between the political interests of the government and its economic ability when the latter is not able to overcome the barrier created by the former. A solution to this problem is possible through changes in bankruptcy legislation when its main principle of avoiding the unwanted bankruptcy of firms will be replaced by the principle of liquidation of unviable firms. Such a change in bankruptcy legislation can be implemented only during the economic upswing.

The Leniency of Personal Bankruptcy Regulations in the EU Countries

Discussions on personal bankruptcy regulations are usually focused on the controversial effects of leniency on society, economy, financial markets, entrepreneurship, and labour supply. However, the methodology of measuring leniency has been limited to one-time legislative changes or some elements of the US personal bankruptcy system. In contrast, we create a composite index of personal bankruptcy legislations. We calculate the composite index for 25 EU countries and the US as a benchmark, validate the results, and rank the countries according to the leniency of their personal bankruptcy systems. We analyse the index scores by region, law origin, and the age of the regime. We conclude that the systems show high heterogeneity and cannot be clustered by region or legal origin assumed based on former studies. However, there is a strong association between leniency and the age of legislation. Results indicate that personal bankruptcy policies in the EU are usually launched as creditor-friendly and are later shifted to a more lenient direction.

О процессуальной защите независимого кредитора в банкротстве аффилированного должника

In the article, the author raises the problem of insufficient procedural protection of an independent creditor in case of bankruptcy of an affiliated debtor. Revealing the imperfection of the norms of bankruptcy legislation on the basis of the legal positions formed by the courts, the author comes to the conclusion that it is necessary to reform the legal norms, strengthen the role of the court in considering the claims of creditors, study the affiliation of relations between creditors and the debtor and their impact on the possibilities of procedural protection of independent creditors.

Prospects for international bankruptcy legislation and new challenges

In our increasingly globalised world, businesses may operate in more than one country. If this is the case for a business and the business is forced to declare bankruptcy, multiple legal issues can arise. This is due to the lack of a single law relating to international insolvency, with most legal systems across the world having been developed on a territorial basis. Although there have been attempts to develop a unified framework for international insolvency, there is a need for improved harmonisation and modernisation of international business rules. Professor Etsuko Sugiyama, Graduate School of Law, Hitotsubashi University, Japan, is working to develop and implement measures that will facilitate cross-border cooperation when it comes to international bankruptcy. In one line of investigation, she is exploring whether existing systems in Japan are sufficient to deal with issues associated with international bankruptcy. In addition, Sugiyama is part of the United Nations Commission on International Trade Law (UNCITRAL) working group five, which works to facilitate a harmonisation of the rules surrounding domestic and cross-border insolvency. However, the group's rules and recommendations are yet to be adopted by all countries, necessitating more work to encourage uptake. This involves providing information on legislation and promoting the benefits.

ОСПАРИВАНИЕ СДЕЛОК В РОССИЙСКОМ СУДЕ В РАМКАХ ИНОСТРАННОГО БАНКРОТСТВА

​ The article addresses the special features of avoidance transactions of a foreign insolvent debtor for alienation of property within Russian Federation. The author argues that the power of the foreign insolvency administrator to bring a claim to challenge the transaction stems from the Arts. 1195–1197 and 1202 of the Civil Code of the Russian Federation regarding the law applicable to the legal capacity of a person. On the separate line the article discusses the issue of law applicable to challenging of various categories of transactions of a foreign debtor. Based on the analysis of the doctrine and judicial practice, the author comes to the conclusion that transactions concluded by a foreign debtor after the introduction of a bankruptcy procedure may be challenged in a Russian court on the basis of the limitation of the legal capacity of a foreign person (Arts. 1195–1197 and 1202 of the Civil Code of the Russian Federation). At the same time, foreign bankruptcy legislation cannot be applied to avoidance of real estate transactions concluded before the introduction of bankruptcy procedure against a foreign debtor due to paragraph 2 of Art. 1213 of the Civil Code of the Russian Federation. The article is concluded with an analysis of the issue of jurisdiction of the claim for challenging the transaction of a foreign insolvent debtor.

Ways to satisfy the claims of construction participants in the bankruptcy case of developers in Russia

Bankruptcy legislation in Russia is constantly changing. The main purpose of such changes is to create favorable conditions for creditors. During the bankruptcy case of developers, the rights of construction participants were violated for a long time. The Russian bankruptcy law currently contains special rules governing the bankruptcy of developers. The law provides for various guarantees of the rights of construction participants. The experience of applying bankruptcy legislation to developers abroad demonstrates its peculiarities. The task of the state is to ensure a high level of protection of the rights of citizens whose funds are attracted for the construction of housing. The bankruptcy law provides for special ways to satisfy creditors’ claims in a developer’s bankruptcy case. Such methods include the creation of a housing construction cooperative, the settlement of claims by transferring residential premises, and the attraction of a new developer to complete construction. Much attention is given to the transfer of a developer’ right on the object under construction and a plot of land to the housing and construction cooperative or another specialized consumer cooperative as a means to satisfy the requirements of construction participants. The author reveals the conditions for such satisfaction, specifics of making the corresponding decision.

Economic and legal necessity of personal bankruptcy legislation in China

AbstractWith more domestic pilot explorations launched in China, alternative debt adjustment regulations and bills relating to personal bankruptcy are thriving. This article aims to familiarize the readers with both the economic and legal necessity of a personal bankruptcy system as well as the feasibility of future legislation in China by examining publicized reports and present regulations. Past decades have witnessed the take‐off of China's economy along with prevailing trends in higher debt ratio, more credit loans, and pan‐commercialization. The proliferation of over‐indebtedness propels the need for personal bankruptcy regime. Given the status quo, some alternative legal methods are implemented. By deconstructing the existing regional regulations, this work identifies both progress and drawbacks of current debt adjustment rules from three angles: creditors' benefits, debtors' benefits, and social benefits. After identifying the need for personal bankruptcy legislation, this contribution focuses on the feasibility of a personal bankruptcy system in China. Several salient issues are discussed in three aspects, including political implications, cultural resistance, and social conditions. These unique factors should be considered in forthcoming legislation in China in order to secure a more suitable system.

ON THE INEXTRICABLE LINK BETWEEN THE PERSONALITY OF THE PARTICIPANT AND THE SOCIETY ON THE EXAMPLE OF LAW ENFORCEMENT PRACTICE ON BRINGING THE DEBTOR'S CONTROLLING PERSONS TO SUBSIDIARY LIABILITY

The purpose of the research. Bankruptcy proceedings increasingly involve not only controlling persons but also members of their families. The reason for this is the conflict of interests of the family and creditors. The development of bankruptcy legislation leads to a reduction in the possibilities of preserving the property of family members from collection under the obligations of the controlling person of the debtor. Until recently, one of these methods was the alienation of property in favor of a minor, which undoubtedly led to a violation of creditors' interests. The need to protect creditors' interests gave rise to new specific forms of lawmaking by the higher courts, in particular, bringing the children of the controlling debtor to responsibility. This decision seems to be controversial. This is the exhaustion of the theory of independent legal personality of a legal entity and the lack of a theoretical justification for the implementation of entrepreneurial activities of citizens in the form of participation (membership) in a legal entity. The article aims to identify sources of legal uncertainty in bringing the children of the controlling debtor to respond within bankruptcy procedures. The article analyzes the judicial practice in cases of bringing family members of a controlling debtor, including children, as controlling beneficiaries, to subsidiary liability for society's obligations through the prism of the conscientiousness of the exercise of parental rights and the conscientiousness of a minor. Results. It is proposed to introduce into legislation two presumptions: a refutable presumption of the conscientiousness of a parent and an irrefutable presumption of a child's good faith as a tool to save a minor from civil death through the fault of the parents.

Nastanak i pravno regulisanje instituta druge šanse za preduzetnike u Evropskoj uniji

In the history of human civilization, there has always been the problem of overindebtedness and personal bankruptcy, as well as the tendency to protect such persons to some extent from excessive sanctions or the consequences of their insolvency. Benevolence towards the debtor is limited by the existence of conditions of conscientiousness and honesty of the debtor in all legal systems, while the amount of debt forgiveness is different. Debt relief and providing a new chance to the entrepreneur is a kind of systemic social measure that should ensure the employment of the individual and his family, but also to ensure the continuity of the capitalist system. It is noticeable that benevolence towards the debtor through debt relief was a characteristic of the Anglo-Saxon jurisdictions, while the regulations of the states of legal systems based on Roman law were traditionally oriented in the opposite direction. Although the Republic of Serbia has regulated the matter of bankruptcy and reorganization, in many parts under the EU Directive on reorganization and bankruptcy from June 2019, it has not been the case with the area of the second chance for the entrepreneur and the possibility of debt release, so it will be necessary to adjust national regulations of bankruptcy. In this paper, the authors analyze the origin of debt forgiveness in case of entrepreneur bankruptcy through history and theories, and select the comparative law and provisions of the EU Directive on reorganization and bankruptcy which regulate the second chance for entrepreneurs, as well as the purpose and measures that preceded the adoption of this Directive. Another important possibility for insolvent entrepreneurs is their personal administration with bankruptcy estate during the process of reorganization. Entrepreneurs' personal administration is regulated by bankruptcy legislation in various ways in comparative legal systems, and in Serbian law, it had been regulated for the first time by the Bankruptcy Procedure Act of 2004, but repealed by the Bankruptcy Act in 2009. Taking into account its importance for the national bankruptcy law, Serbian legal theory has already given the reasons due to which it is necessary to reintroduce the institute of personal administration of debtors into domestic bankruptcy law. On the other hand, sole debt release in Serbian law comes into effect at the moment the creditor declares to the debtor that he will not ask for the fulfillment of the debt and the debtor agrees with that, and such an agreement is made in writing. Debt release is a possibility provided in the Agreed Financial Restructuring Act 2015 that creditor and debtor may use during the process of reorganization, provided they reach an agreement to that end.

Collection of tax debts under clause 2 of Article 45 of the Tax Code of the Russian Federation in circumvention of the Bankruptcy Law

This article deals with the issues of collecting tax debts under clause 2 of Article 45 of the Tax Code of the Russian Federation in the conditions of applying the procedures provided for by the Bankruptcy Law to the taxpayer. In search of the correct correlation of the general and special law, the paper considers the tools for collecting debts under tax legislation and under bankruptcy legislation. The author examines the limits of the fiscal interest of the state and the guarantee to the participants of the bankruptcy case of the legal insolvency procedure. In addition, the author draws attention to the law enforcement trend of giving priority to budgetary interests in comparison with the institutional interest of creditors of an insolvent debtor to repay claims by bringing controlling persons to subsidiary liability.

Еволюція законодавства про банкрутство в Україні

The article is aimed at defining the main changes in the bankruptcy legislation in Ukraine, as well as the stages of evolution of the bankruptcy institute. The dynamics of bankruptcies of enterprises is considered, stages of evolution of the bankruptcy institute in Ukraine are systematized. Despite the small number of real bankruptcies so far, this problem in the context of quarantine measures is very significant and requires sufficient attention, since mass bankruptcies have an immoderate impact on the country’s economy. As a result of the study, the main changes in the legislation of Ukraine on bankruptcy procedures are determined. These are the criteria for opening a debtor’s bankruptcy procedure; approach to establishing and paying monetary remuneration of the insolvency receiver; term of sanitation; deadline for filing an application by the creditor for debt repayment after publication about opening a bankruptcy procedure; norm on limiting the participation of interested parties in voting at a meeting of creditors when approving a sanitation plan; term for filing an application by the creditor for the repayment of debt after publication about opening a bankruptcy procedure, as well as the possibility of bankruptcy of an individual – not a business entity. The new Code of Ukraine on Bankruptcy Procedures has enacted a set of innovations designed to improve the State regulation of the process of rehabilitation of potentially capable enterprises through their sanitation or reorganization, as well as to simplify the liquidation procedure for those enterprises whose opportunities have already been exhausted, and establishing their activities is impossible. The positive consequences of the introduction of the Code should be a reduction in the terms of application of property management procedures and sanitation measures while increasing the efficiency of these measures.

The problem of insufficient debtor’s property during bankruptcy

The purpose of the study is to determine the key factors affecting the occurrence of insufficiency of debtors’ property in modern conditions, as well as to formulate the main directions of overcoming them. The methodological basis of the research was the dialectical method of scientific knowledge, general scientific (analysis, synthesis, modeling), and special scientific methods (formal and legal, statistical). The result of the work was the formulation and substantiation of tasks, the setting of which is necessary for further scientific research aimed at increasing the number of satisfied creditors’ claims. In addition, the authors identified the elements of the legislatively enshrined bankruptcy mechanism, which require changes to resolve the indicated problem. In particular, the measures proposed by the authors will make it possible to increase the degree of filling the bankruptcy estate by modernizing the procedure for selling the debtor’s property, stimulating a more active position of the arbitration administrator to challenge the debtor’s transactions, and bringing his controlling persons to subsidiary liability. The novelty of the work lies in the identification of key factors influencing in modern conditions the appearance of signs of insolvency, the quality, and quantity of debtors’ assets, the insufficiency of their bankruptcy estate. Among them, objective economic reasons, imperfection of bankruptcy legislation, dishonesty of key participants in legal relations related to bankruptcy (debtor, bankruptcy administrator, majority creditors), unwillingness to use the institution of bankruptcy rehabilitation mechanisms, and the epidemiological situation are highlighted.

About some features of the bankruptcy legislation of Australia

About some features of the bankruptcy legislation of Australia

СУТНІСТЬ, МЕТОДОЛОГІЯ ОЦІНКИ ТА СУЧАСНІ ТЕНДЕНЦІЇ БАНКРУТСТВА ПІДПРИЄМСТВ В УКРАЇНІ

The urgency of the topic is due to the unstable state of the economic and political situation in Ukraine, as well as the impact of the COVID-19 pandemic, which increases the likelihood of bankruptcy. Bankruptcy - the inability of the debtor recognized by the commercial court to restore its solvency through the reorganization and restructuring procedure and repay the monetary claims of creditors established in the manner prescribed by the Bankruptcy Code of Ukraine other than through the liquidation procedure. The article considers the approaches to the economic essence of bankruptcy from the point of view of domestic scholars and the Bankruptcy Code of Ukraine. The difference between the concepts of bankruptcy and insolvency is established. Methods for predicting and determining the probability of bankruptcy are grouped as follows: 1) expert methods (Argentina method (A-score), or collapse probability estimates; Scone method; ERNST & WHINNEY method; VV Kovalev's method of qualitative analysis); 2) economic and mathematical methods (discriminant analysis; cluster analysis; classification trees; simulation modeling); 3) artificial intelligent systems (diagnostic expert systems; neural network computing systems;) 4) methods of assessing the financial condition (the system of indicators of W. Beaver; the method of diagnosing the bankruptcy of I. Blanc; the method based on the calculation of the financing ratio of illiquid assets; the model of financial equilibrium of the company J. François and I. Roman). The probability of bankruptcy of the enterprise is estimated by means of models of Altman, Taffler, Springgate, Tereshchenko, Matviychuk, two-factor model of an estimation of probability of bankruptcy of the enterprise. The conclusion on the results of the analysis is made. The dynamics of the number of applications in bankruptcy proceedings for the last 10 years is analyzed. Amendments to the bankruptcy legislation in connection with the COVID-19 pandemic have been studied. The indicators of Resolving Insolvency for the last year are considered. Prospects for further research are to outline ways to prevent bankruptcy.

Legally protected cultural goods and bankruptcy proceedings

This paper deals with general problems of legal aims of bankruptcy proceedings in connection with the aims of heritage protection – issues built by completely different systems of values. Bankruptcy is designed for protecting pecuniary interest of a limited group of people, while cultural heritage is protected for present and future generations, despite its current commercial significance. In the global environment, bankruptcy of a cultural goods owner usually has a cross-border range but national bankruptcy legislations and laws devoted to heritage protection differ in very serious aspects. For this reason the paper is not limited to any concrete legal order. There are discussed some important universal issues: limits for a trustee in managing cultural goods which are a part of bankruptcy estate, legal status of cultural goods excluded from bankruptcy estate, consequences of bankruptcy sale in the case of lack of bankrupt’s ownership title.

Research on the Legal Risk of Securitization Bankruptcy in Aircraft Finance Lease

Aircraft financing leasing has become an important form of aircraft trading. The use of predictable cash flow brought by financing leasing to achieve asset securitization business operations is conducive to revitalizing market resources and promoting the prosperity and development of market participants. But it is also because the asset securitization process under aircraft financing lease involves multiple parties and the legal relationship is complicated, so lessors, lessees and special purpose carriers are more likely to have bankruptcy in market competition, which affects the entire asset securitization working normally. Therefore, this paper puts forward some measures to deal with the above-mentioned legal risks from the angles of establishing the means of pre-prevention and termination of losses, perfecting the bankruptcy legislation of financial lease, and innovating the system of special purpose company, in the hope that the law can produce a marked effect in the asset securitization of aircraft finance lease.

РОЗВИТОК КОНКУРСНОГО ПРОЦЕСУ (ПРОЦЕДУРИ БАНКРУТСТВА) В УКРАЇНІ У 2000-Х РОКАХ

The article deals with the chronology of the legal regulation for bankruptcy in Ukraine at the stage of its economic recovery, clarifies the essence of its elements, as well as the effectiveness of the entire legal mechanism and its individual components. The authors pay attention to the legal regimentation of the bankruptcy procedure and to the legal acts that regulate its implementation. The main novelties and shortcomings of these acts and their impact on law enforcement practice and on the economy as a whole are highlighted. The article considers the approaches of the legislator to the settlement of the legal status of creditors, their representative bodies, the arbitration managers, as well as the implementation of certain court procedures applied to the debtor at different stages of bankruptcy legislation development. It was found that the Bankruptcy Law, as amended in 2002, became one of the driving forces of Ukraine's economic growth. It is determined that the Recommendations of Supreme Economic Court of Ukraine have highlighted one of the key provisions (principles), in particular the priority of the Bankruptcy Law over other legal acts and the latter can be applied in insolvency as much as necessary and possible. It is substantiated that the Bankruptcy Law, as amended in 2011, contained both the development of judicial practice as well as revolutionary provisions and the achievement of technical progress in the field of the Internet, which contributed to bringing the bankruptcy proceedings to a higher level. It is argued that a number of provisions of this law were used in the preparation of the Commercial and Procedural Code of Ukraine and the Civil Procedural Code of Ukraine. It is determined that a number of the most important provisions of the legislation of the period under study were not reflected in the latest bankruptcy legislation, in particular: clear conditions for initiating bankruptcy proceedings; variety of bankruptcy procedures applied to debtors with legal personality; indefinite circle of subjects of bankruptcy and those persons who are not included in the named circle.