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Legal regulation of insolvency (bankruptcy) of credit organizations.

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Presentation on theme: "Legal regulation of insolvency (bankruptcy) of credit organizations."— Presentation transcript:

1 Legal regulation of insolvency (bankruptcy) of credit organizations

2 Federal Law No. 40-FZ of February 25, 1999 About insolvency (bankruptcy) of credit organizations Federal law No. 127-FZ of October 26, 2002 About insolvency (bankruptcy) (regarding not settled by the previous law); Federal law from December, 2nd, 1990 No About banks and banking activity. Legislation about insolvency (bankruptcy) of credit organizations

3 Credit organization - a legal entity entitled to carry out banking operations envisaged in the Federal Law About banks and banking activities to make profit as the main goal of their activities on the basis of special permission (a license) of the Central Bank of the Russian Federation (Bank of Russia). A credit organization shall be formed as an company on the basis of any form of ownership. Banks is credit organization that enjoys an exclusive right to carry out in the aggregate the following banking operations a ttraction of monetary resources of legal entities and natural persons in the form of deposits, investing the mentioned resources in its own name and for its own benefit on a returnable basis through payments within specified deadlines, opening and keeping of bank accounts of natural persons and legal entities.) ; Non-banking credit organization is a credit organization that enjoys the right to carry out individual banking operations envisaged in the present Federal Law. Permissible combinations of banking operations for non-banking credit organizations shall be fixed by the Bank of Russia.); Foreign credit organization isa credit organization that enjoys the right to carry out individual banking operations envisaged in the present Federal Law. Permissible combinations of banking operations for non-banking credit organizations shall be fixed by the Bank of Russia.). Credit organizations

4 Insolvency (bankruptcy) of a credit organization means its inability as recognized by an Arbitration Court to satisfy in full creditors' claims with respect to monetary obligations and/or to perform its obligation to make obligatory payments. Evidence of bankruptcy of credit organizations : A credit institution shall be deemed unable to satisfy creditors' claims with respect to monetary obligations and/or to meet an obligation to make mandatory payments if it fails to meet the corresponding obligations within fourteen days from their due date and/or if the value of the organisation's property (assets) after its banking transaction license has been revoked is insufficient for the credit organisation to discharge its liabilities owing creditors and (or) its duty to make mandatory payments. Evidence of Bankruptcy

5 Measures on prevention of insolvency (bankruptcy) of credit Institutions financial rehabilitation of the credit organization (rendering of financial assistance to the credit institution by its founders (participants) and other persons; change of the structure of assets and the structure of liabilities of the credit institution; bringing into line the amount of authorised capital of the credit organisation and its own resources (capital); change of the credit institution's organisational structure;) appointment of the provisional administration to manage the credit organisation reorganisation of the credit organisation These measures are applied only after revocation of the license for realization of banking operations. Prevention of insolvency

6 The right to the reference in arbitration court with the application to recognize credit organization to be bankrupt has the competitive creditor or the authorized state body after a revocation of the license for realization of banking operations. Liquidation proceedings of credit organization can be undertaken by arbitration court after revocation license for realization of banking operations. Liquidation proceedings are used by arbitration court during a credit organisation's bankruptcy case Functions of the insolvency practitioner are exercised by State Corporation «Deposit insurance Agency». Undertaking bankruptcy petition

7 Two versions of compulsory liquidation: Under the decision of arbitration court in connection with infringement by the credit organization of statements of law (if at it the license for realization of banking operations is withdrawn, but thus there are no attributes of an inconsistency (bankruptcy); According to the legislation about insolvency (bankruptcy) in case when cost of property of the credit organization concerning which the decision on liquidation is accepted, is insufficient for satisfaction of requirements of its creditors. Compulsory liquidation

8 Liquidation proceedings shall be introduced for a term of one year. The time period of liquidation proceedings may be extended on the application of a person participating in a bankruptcy case by six months at the most. The main purpose of liquidation proceedings - equitable assessment among creditors during the limited time period of property of the insolvent debtor under condition of observance of principles of sequence and proportionality of satisfaction creditors' claims. Liquidation proceedings

9 Order of satisfying creditors claims All current obligations of a credit organization shall be discharged out of turn at the expense of the bankrupt estate Current obligations the duty of paying off the debts formed before the date of withdrawing the credit organisation's licence for conducting banking operations related to payments for carried out works (rendered services) that are connected with continued functioning of the credit organisation within the limits of the estimate of outlays endorsed by the Bank of Russia in compliance with the Federal Law on Banks and Banking; the duty of making obligatory payments that arose within the period starting from the date of withdrawing the credit organisation's licence for conducting banking operations up to the starting date of bankruptcy proceedings, as well as the duty of making mandatory payments that arose in the course of bankruptcy proceedings when paying labour wages to the credit organisation's employees) the duty of making obligatory payments that arose within the period starting from the date of withdrawing the credit organisation's licence the duty of deducting monetary funds from the wages of the credit organisation's employees paid in connection with discharging the duties indicated in the 1st item within the period from the date of withdrawing the credit organisation's licence for conducting banking operations up to the date of completing liquidation proceedings

10 Очередность General order of satisfying creditors' claims Features concerning credit organizations the first turn is for settlements relating to the claims of the citizens to whom the debtor is liable for harm inflicted to life or health; the second turn is for settlements relating to disbursement of severance benefits and employees; the third turn is for settlements with other creditors claims. The first turn: 1) the claims of the natural persons in respect of which the credit organisation is liable for causing damage to their life and health by way of capitalising appropriate time payments, and the moral damage shall be compensated as well; 2) the claims of the natural persons who are creditors of the credit organisation under contracts of bank deposit and (or) bank account made with them (except for the persons engaged in business activities without forming a legal entity, if such accounts are opened in connection with the said activities, as well as for the persons indicated in Item 5 of this Article); 3) the Agency's claims under contracts of bank deposit and bank account passed over to it 4) the claims of the Bank of Russia that have passed over. The claims of the natural persons under contracts of bank deposit and (or) contracts of bank account for compensation damages in the form of loss of profit, as well as for paying the amounts of financial sanctions shall be included into the composition of the creditors claims to be satisfied in the third turn. Creditors' claims to subordinated loans shall be satisfied after satisfying the claims of all other creditors included into the register of creditors' claims. secured creditors claims are discharged prior to the other creditors except for obligations to the first and second priority creditors if their claims occurred before a relevant contract of pledge/mortgage had been concluded Order of satisfying creditors claims

11 Establishment and regulation of methods of property alienation of the liquidated credit organization to other managing subjects (to the credit organizations possessing the license of Bank of Russia on banking operations realization); Introduction of not monetary forms of reckoning with creditors by the liquidated credit organization (a compensation, novations, offset of requirements). Executive summary of the lawdraft

12 To increase efficiency of bankruptcy procedure of the credit organizations To reduce terms of liquidation proceedings To minimize current expenses To increase quantity of satisfied creditors claims The purposes of the lawdraft

13 Thank you for attention!


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