Procedure for Confirmation of a Bankruptcy manager under the Russian Bankruptcy Law

Procedure for Confirmation of a Bankruptcy manager under the Russian Bankruptcy Law

(Series publications about Russian Law Aspects of Insolvency)

Having received the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt containing an indication of a bankruptcy manager nominee or the minutes of a meeting of creditors on selection of a bankruptcy manager nominee, the declared self-regulating organisation of bankruptcy managers in which the selected bankruptcy manager is member shall provide information to the arbitration court on the compliance of said nominee with the requirements envisaged by the Russian Bankruptcy Federal Law.

The bankruptcy manager is a citizen of the Russian Federation who is a member of one of self-regulating organisations of bankruptcy managers. The bankruptcy manager is a professional-activity agent who is pursuing the professional activity regulated by the Russian Bankruptcy Federal Law by means of private practices. A bankruptcy manager is entitled to pursue other types of professional activity and also entrepreneurial activity, unless such activity affects the appropriate execution of the duties thereof established by  Federal Law. A bankruptcy manager is only entitled to be member in one self-regulating organisation of bankruptcy managers.

A self-regulating organisation of bankruptcy managers shall establish the following compulsory conditions for membership in it:

the availability of a higher education background;

the availability of a work record in managerial positions of at least one year and probation as an assistant to a bankruptcy manager in a bankruptcy case of at least six months or probation as an assistant to a bankruptcy manager in a bankruptcy case of at least two years, unless longer terms are envisaged by the standards and rules of professional activities of bankruptcy managers confirmed by the self-regulating organisation (hereinafter referred to as "standards and rules of professional activity");

the passing of a theory examination according to a bankruptcy manager training curriculum;

the lack of a sanction in the form of disqualification for an administrative offence or of deprivation of a right to occupy certain positions or engage in a certain activity for the commission of a crime;

the lack of conviction for the commission of a deliberate crime;

absence within three years preceding the day of presentation to the self-regulating organisation of the application for entering the membership of this self-regulating organisation of the fact of exclusion from among members of this or another self-regulating organisation of arbitration managers in connection with an infringement of this Federal Law, other federal laws, other normative legal acts of the Russian Federation, federal standards, standards and rules of the professional activity, not eliminated within the term established by the self-regulating organisation or having an ineradicable nature.

Also the conditions for membership in the self-regulating organisation of bankruptcy managers are as follows: the member of the self-regulating organisation having a contract of compulsory insurance of liability, the member of the self-regulating organisation having paid the dues established by it, for instance contributions to the compensation fund of the self-regulating organisation.

Having received the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt which does contains no indication of a bankruptcy manager nominee or the minutes of a meeting of creditors on selection of a self-regulating organisation the declared self-regulating organisation shall nominate a bankruptcy manager from among its members who have expressed their consent to be confirmed by the arbitration courts in the bankruptcy case.

The declared self-regulating organisation is not entitled to nominate a bankruptcy manager who has no state secret clearance of the established form if the availability of such clearance is a condition sine qua non for the arbitration court to confirm the bankruptcy manager.

Within two days and seven days respectively from the date of receipt of the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt the debtor and the territorial body of the federal executive governmental body charged with security matters shall provide information to the arbitration court and to the declared self-regulating organisation of bankruptcy managers on the state secret clearance form of the head of the debtor and on the degree of secrecy of the information circulating at the debtor's enterprise or on the lack of such clearance or such information.

The declared self-regulating organisation of bankruptcy managers shall provide unfettered access for persons concerned to the implementation of the procedure of nominating a bankruptcy manager.

A decision on nomination of a bankruptcy manager shall be taken by the declared self-regulating organisation on a collective basis.

Within nine days after the receipt of the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt or the minutes of the meeting of creditors on selection of the bankruptcy manager nominee the declared self-regulating organisation of bankruptcy managers shall send information to the arbitration court, the applicant (to the meeting of creditors or a representative of the meeting of creditors) on the compliance of the person nominated for a bankruptcy manager with the requirements envisaged by the Russian Bankruptcy Federal Law, by a method ensuring delivery within five days after the date of dispatching or shall nominate a bankruptcy manager, and also if necessary, information on the availability of the bankruptcy manager's state secret clearance.

The declared self-regulating organisation shall be accountable for the provision of unreliable information on bankruptcy managers.

On the applicant's petition a replacement may be provided for the bankruptcy manager nominee or the self-regulating organisation specified in the application for deeming the debtor bankrupt, before the date of dispatch of the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt or the minutes of the meeting of creditors on selection of the bankruptcy manager nominee to the declared self-regulating organisation.

According to the results of consideration of the information provided by the self-regulating organisation of bankruptcy managers on the compliance of the bankruptcy manager nominee with the requirements envisaged by the Russian Bankruptcy Federal Law, or the bankruptcy manager nominee the arbitration court shall confirm the bankruptcy manager who meets such requirements.

If the self-regulating organisation of bankruptcy managers provides information according to which the bankruptcy manager nominee does not meet the requirements envisaged by the Russian Bankruptcy Federal Law, and also information according to which the bankruptcy manager lacks sufficient competence, conscientiousness and independence for the implementation of a proceeding applicable in a bankruptcy case the arbitration court may take a decision on refusal to confirm the bankruptcy manager nominee for the bankruptcy case.

If the arbitration court confirms the bankruptcy manager nominee in respect of whom the self-regulating organisation of bankruptcy managers has provided the information, the bankruptcy manager shall conclude an additional contract of insurance of bankruptcy manager's liability and present this contract to the arbitration court and to the self-regulating organisation of bankruptcy managers in which he/she is a member, within 10 days after being confirmed by the arbitration court. The insurance sum under the additional contract of insurance of bankruptcy manager's liability shall not be less than the amount of the compensation fund of the self-regulating organisation of bankruptcy managers as of the last accounting date preceding the date of confirmation of the bankruptcy manager nominee.

If a bankruptcy manager has been relieved or removed by an arbitration court from a bankruptcy case and a decision on selection of another bankruptcy manager or another self-regulating organisation of bankruptcy managers has not been presented by a meeting of creditors to the arbitration court within ten days after the date of the bankruptcy manager's relief or removal the self-regulating organisation in which he/she was member shall nominate a bankruptcy manager to the arbitration court in the procedure established by the present article for confirmation in the bankruptcy case.

If the declared self-regulating organisation of bankruptcy managers does not nominate a bankruptcy manager or provide information on the compliance of a nominated bankruptcy manager to the arbitration court within 14 days after the receipt of the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt or the minutes of the meeting of creditors on selection of a bankruptcy manager or self-regulating organisation the arbitration court shall adjourn by 30 days the hearing of the issue of confirmation of a bankruptcy manager in the bankruptcy case. In this case the applicant and also the other persons deemed party to the bankruptcy case are entitled to file a petition for confirmation of a bankruptcy manager in the bankruptcy case from among the members of another self-regulating organisation.

If within said term the applicant does not file a petition with the arbitration court or the self-regulating organisation specified in such petition does not provide information on the compliance of the bankruptcy manager nominee or nominate a bankruptcy manager the arbitration court shall consider petitions of the other persons deemed party to the bankruptcy case.

If several petitions are received from the other persons deemed party to the bankruptcy case the arbitration court shall confirm a bankruptcy manager, the candidate of which nominated in the petition was received first by the arbitration court, or a bankruptcy manager the candidate of which nominated by the self-regulating organisation mentioned in such petition.

If no nomination is done for a bankruptcy manager within three months after the date when a bankruptcy manager is to be confirmed according to the present Federal Law the arbitration court shall terminate proceedings in the case.

If the bankruptcy manager nominated in the arbitration court ruling on acceptance of the application for deeming the debtor bankrupt or in the minutes of the meeting of creditors on selection of a bankruptcy manager nominee or if other bankruptcy managers being members of the declared self-regulating organisation of bankruptcy managers do not have state secret clearance, provided such clearance is a condition sine qua non for the arbitration court to confirm a bankruptcy manager, the declared self-regulating organisation shall inform the arbitration court about it.

The arbitration court shall apply to the declared self-regulating organisation of bankruptcy managers, unless in the event of non-receipt or late receipt of information about the availability of the state secret clearance of the debtor's head and about the form of such clearance, so that information on the compliance of the person nominated for a bankruptcy manager be confirmed or the self-regulating organisation nominate again a bankruptcy manager.