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IAIR II Bucharest Workshop Nowadays Bankruptcy System & Recent developments in Russian bankruptcy legislation Ministry of Economic Development and Trade.

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Presentation on theme: "IAIR II Bucharest Workshop Nowadays Bankruptcy System & Recent developments in Russian bankruptcy legislation Ministry of Economic Development and Trade."— Presentation transcript:

1 IAIR II Bucharest Workshop Nowadays Bankruptcy System & Recent developments in Russian bankruptcy legislation Ministry of Economic Development and Trade of the Russian Federation Terentiev Alexei Bankruptcy division Deputy head

2 Introduction Bankruptcy act balance between the interests of the creditor and the debtor; Bankruptcy act 2002 is the basis of the bankruptcy reform in Russia.

3 Bankruptcy act 2002 fundamental issues: Introducing self-regulation (trustees’ professional community); Dividing the functions of the Government as a creditor (fiscal), a controller and a regulator; Introducing a new rehabilitation procedure in bankruptcy Changing the order for the settlement of tax claims from priority into general (with the rest of the creditors)

4 Self-regulation in Russia Arbitrage trustees should be members of self-regulated organizations of arbitrage trustees (SRO) today - 31 SRO more than 6000 arbitrage trustees SROs controls the activity of its members and should consist at least of 100 members (but not limited) SROs are non-profit, non-governmental organizations Federal Registration service controls SRO’s activity The main role plays public control, role of public opinion increases (great role of professional community)

5 Sublegislative acts –Acts of Government (more than 20 acts) –Acts of The Ministry of Economic Development and Trade (more than 20 acts) –Summarizing of the judicial practice (acts of The Supreme Arbitrage Court)

6 Updating bankruptcy legislation in Russia Within the second stage of the bankruptcy system reform the following law amendments are being developed : TechnicalConceptual They have different stages of readiness

7 List of Concepts and Bills Type TypeStage ConceptBill Inside the Ministry 11 In the Government 110 In the State Duma -5

8 Priorities of the bankruptcy legislation in Russia 1. Preservation of jobs, reconstruction of industry debtor 2. Minimization of risks and decreasing the possibility of social and economic crises 3. Forming the profession of trustees as effective and independent managers, performing public functions 4. Further development of self-regulation mechanism in the sphere of anti-crisis management 5. Ensuring the settlement of creditors’ claims duly 6. Ensuring the imminence of civil, administrative and criminal liability

9 Updating the bankruptcy legislation in Russia The main amendments are as follows: Complex amendments  Delegation of most control functions to SROs  introduction of the Federal Standards regulating trustees activity  Trustees should be members of one of the SRO

10 Updating the bankruptcy legislation in Russia The main amendments are as follows: Complex amendments  Improve the effectiveness of control function by delegating it from State to public  Government sets the rules of play and doesn’t interfere in the activity of trustees This concludes the first stage of the bankruptcy reform

11 Latest developments Among conceptual amendments are: Including confirmation of creditor’s claim in official bankruptcy procedure Updating the procedure of closing the bankruptcy case when the employer has no assets Clarifying the type and process of financial analysis of the insolvent

12 Consumer bankruptcy Consumer bankruptcies are regulated “de jure” by Civil Code and Bankruptcy act 2002 Provisions of consumers bankruptcies “De facto” are not in effect until complex amendments are made (in particular executive proceedings) There is a boom in mortgage lending and consumer lending in Russia (30 % growth per year)

13 Consumer bankruptcy “Fresh start” system Settlement of debts according to a rehabilitation plan approved by a creditor New terms for rehabilitation (from 2 years long) Writing off a part of a debt and penalties

14 Bankruptcy of financial institutions Financial institutions – insurance companies, professional participants of securities market and credit institutions Credit Institutions Bankruptcy act 1999 amendments: Introduction of new mechanisms for prevention of financial institutions bankruptcies Outside management procedure for insurance companies (out of judicial procedures) New list of financial institutions: investment funds, special depositaries, consumer cooperatives and management companies Transfer of portfolio of insurer from insolvent to other one; business of insolvent insurer sale;

15 Electronic Database The following information online resources are available today in Russia based on free access: Register of SRO (internet site of Russian Registration Service Register of trustees (internet site of Russian Registration Service Lists of SRO, chosen by Tax Service for the purposes of bankruptcy procedures (http://www.nalog.ru/index.php?topic=upr_nz) Future amendments in bankruptcy legislation (internet site of Ministry of Economic Development and Trade of the Russian Federation Information on bankruptcies is published in official Russian Newspaper

16 Developments of Electronic Database The following information resources are planned for development and introduction in Russia: Information base on bankruptcies in Russia This system should consist of several components with different access levels: - one part of information will be available only for governmental bodies - another part will be placed in Internet with free access Second half of 2007 – launching this system

17 Guarantee Fund System Protection of the employees’ rights in case of employer’s insolvency (bankruptcy)  There are a number of ways to create this Fund. The social security system in Russia differs a lot from those from abroad  We are studying closely the experience of other countries in issues of financing, foundation and management.

18 Ministry of Economic Development and Trade of the Russian Federation Terentiev Alexei Bankruptcy division Deputy head


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