Arbitration manager in bankruptcy proceedings
Many companies know crises and bankruptcy first-hand, and if in the past century a crisis was merely a temporary and purely economic phenomenon, after 2008 the world simply exists in a post-crisis reality. A decline in a company's profits can be accompanied by many factors, both external and internal. Competitive wars, globalisation and the general economic downturn have always been risk factors, as has the incompetence of the company's management. However, regardless of the factors behind the decline in solvency, bankruptcy proceedings may be opened against the company.
Arbitration manager - legislation of Ukraine
The current legislation of Ukraine allows both the debtor company and the creditor to file a court application to have the enterprise declared bankrupt. If the company's financial condition is deteriorating rapidly, creditors' debt is growing and solvency is declining, the first thing to do is to contact an experienced crisis manager to analyse the company's financial and business activities.
Current Ukrainian legislation does not provide for such a profession as a crisis manager; in turn, an auditor can only issue an opinion on the company's current condition without further recommendations on restoring solvency. An arbitration manager, in turn, is a qualified specialist who has undergone specialised training and obtained a licence in the manner prescribed by law.
Functions of an arbitration manager
An arbitration manager is a specialised professional who not only assesses the financial risks of the enterprise but also proposes a range of legal measures to restore the enterprise's solvency, protect its assets and bring it out of the crisis. It is also worth noting that you can use the services of an arbitration manager not only locally in Kyiv, but throughout the territory of Ukraine.
As an official of the enterprise, the arbitration manager is obliged to assume the functions of ensuring the company's economic activity and document flow, as well as to comply with the requirements relating to the identification of creditors, carrying out sanation, organising the process of selling the debtor's property and the procedure for enterprise liquidation, and must notify law enforcement officials if violations of the law are detected.
In bankruptcy proceedings, the arbitration manager acts as the receiver of property, the manager of the sanation and the liquidator.
As a disinterested person acting within the framework of the Law, the arbitration manager has the right to send requests to obtain the necessary information from state registers, receive materials from other legal entities and, in certain cases, engage specialised structures.
Legal support of the process of restoring the debtor's solvency is considered from the standpoint of both the debtor and the creditor.
A qualified arbitration manager:
- has specialised knowledge in bankruptcy cases;
- has many years of experience in supporting enterprise liquidations;
- understands the legal specifics of the position of courts and state bodies;
- is provided with proper technical support.
Arbitration manager and bankruptcy
The first stage is the administration of property. At this stage of the court proceedings, the debtor company receives a kind of immunity from further growth of creditors' debt – a moratorium on satisfying creditors' claims is introduced. The arbitration manager begins to perform his duties as the receiver of property. The powers of the arbitration manager at this stage include:
- assessment and analysis of the financial and business activities of the enterprise;
- assessment of the existing accounts receivable and creditors' debt;
- compilation of the register of creditors' claims;
- search for and preservation of the enterprise's assets;
- assessment of the possibilities for restoring the enterprise's solvency.
It is also worth noting that the arbitration manager has powers such as analysing the contracts concluded by the enterprise and identifying the causes of the company's bankruptcy, including the analysis of financial indicators for signs of being driven into bankruptcy and embezzlement – which is certainly important where violations have been committed by the company's management and gives the owners an opportunity to preserve their assets. At this stage, the enterprise does not cease its business activity and continues to operate as usual.
After this stage, the arbitration manager informs the court of the possibility of restoring the enterprise's solvency and of the measures required for this. If the restoration of the enterprise's solvency is possible, the court proceedings move to the second stage and the sanation procedure is introduced.
Arbitration manager in bankruptcy proceedings
The arbitration manager is appointed by the court as the manager of the enterprise's sanation. Measures to restore the enterprise's solvency are set out in a special document called the sanation plan.
According to the sanation plan approved by the court, settlements with creditors are made, inefficient assets are sold, and economic measures are taken to bring the enterprise out of the crisis. At this stage, the arbitration manager is vested with a wide range of powers that help him lawfully apply a whole set of tools needed to restore the enterprise's solvency.
Liability of the arbitration manager
If, as a result of an independent assessment of the enterprise's activities carried out by the arbitration manager, the restoration of the enterprise's solvency is impossible, the court proceeds to the third stage, namely the procedure for liquidating the enterprise. At this stage, the debtor's property is assessed, settlements with creditors take place, and the enterprise's activities cease.
It is worth noting that the arbitration manager bears the liability provided by law for his actions. However, you should be attentive to such characteristics as the arbitration manager's work experience, his specialisation and level of qualification. Trust the professionals, and then no crisis, regardless of its causes, will frighten you.