The bankruptcy of the debtor, contrary to the popular belief, can be effective and quite often the only way to meet the demands of its creditors. It is supported by a number of tools provided for in the framework of bankruptcy proceedings.
REVERA is ready to assist in this sphere in the following areas.
• Commencement of bankruptcy proceedings. It may be the only chance of repayment to the creditors, who are at the end of the queue in the enforcement proceedings, and the money from the debtor’s property after its sale will not be enough. In this case, in a bankruptcy proceeding the requirements of a great bulk of creditors refer to the same queue, and are satisfied in proportion to their size.
Initiation of bankruptcy also makes sense in case of withdrawal of the debtor’s assets in order to challenge transactions made by the debtor during the pre-bankruptcy period.
Opposition to the commencement of bankruptcy proceedings. If you are placed high in the queue in the enforcement proceedings, or were a purchaser of the debtor’s assets against the debt to you shortly before filing of a petition in bankruptcy of the debtor by anyone, then the debtor’s bankruptcy may do much harm to your interests.
Risk assessment of making transactions with an insolvent company. Already at the stage of making a transaction (including actions regarding the performance of obligations) it is advisable to assess the risk of its invalidation, including in case of subsequent bankruptcy of the counterparty.
Protection of interests of purchasers of the bankrupt’s property. Often, a bona fide purchasers of the property of a company that later goes bankrupt, have to protect their assets from lawsuits of crisis managers. REVERA Company has a wealth of experience in this kind of business.
Control over manager’s activities. In some cases, creditors get the impression that actions of the manager are performed in favour of interests of the debtor. Lawsuits challenging the transactions that are aimed at withdrawal of assets are not filed, and the bankruptcy case itself goes very slowly. The tools to combat unscrupulous actions (inaction) of the manager may be as follows: appeal by the creditor of such actions, initiation of exemption of a manger from his obligations, bringing him to administrative responsibility.
Subsidiary liability for the obligations of the debtor is another way to repay the debt of the debtor in a bankruptcy proceeding. In case of insufficiency of the debtor’s property in some cases, an obligation to repay the remaining debt owed to creditors may be imposed to persons who can determine the debtor’s actions. The possibility of bringing to subsidiary liability has existed for 10 years from the date of commencement of the bankruptcy proceedings.
• The risk of criminal prosecution for a criminal bankruptcy may be an incentive for compensation by convicted persons of the damage inflicted to the creditors.
Head of Insolvency and Bankruptcy subpractice, attorney at law
+375 17 226 10 26