We Treat Bankruptcy as a Certain Social Institution - Judge of the Commercial Cassation Court Within the Supreme Court Viacheslav Pieskov

This thesis was expressed by the judge of the Commercial Cassation Court within the Supreme Court Viacheslav Pieskov during the event "The Principles of Bankruptcy. The Commercial Court and Insolvency Manager in the Context of War".

As the judge emphasized, according to the Commercial Procedure Code of Ukraine, bankruptcy is a special type of proceeding. At the same time, we understand that bankruptcy proceedings are characterized by strict stages. Each stage has its own purpose and, accordingly, its own stable principles. Moreover, considering the bankruptcy procedure from the international point of view, it should be noted that ensuring the effectiveness of bankruptcy procedures affects the investment attractiveness of our country. In this context, Viacheslav Pieskov mentioned the Doing Business ranking which evaluates each country by economic criteria. Therefore, the Commercial Cassation Court within the Supreme Court sees its task as ensuring the effectiveness of bankruptcy procedures that would comply with national legislation, international obligations of Ukraine and ultimately increase the investment attractiveness of our country.

When deciding on the opening of bankruptcy proceedings, it should be noted that fictitious bankruptcy should not be allowed. And this is where we need to go back to 2011, when under the slogans of liberalization of entrepreneurial activity, the relevant article on fictitious bankruptcy was removed from the Criminal Code of Ukraine. That is, again referring to the international aspect, we realize that in our approaches to bankruptcy procedures and the inadmissibility of fictitious bankruptcy we must comply with the best world practices. Instead, Ukraine went its own way and decriminalized fictitious bankruptcy. Such a development of events, together with the possibility of barrier-free entry into bankruptcy, imposes increased responsibility on the courts at the stage of opening bankruptcy proceedings to prevent fictitious bankruptcies.

Viacheslav Pieskov focused on the grounds for refusing to initiate bankruptcy proceedings under the the Code of Ukraine on Bankruptcy Procedures (in particular, repayment of the claims of the initiating creditor before the preparatory hearing and dispute over the right). Also, according to him, the relevant resolution of the judicial chamber for consideration of bankruptcy cases of the Commercial Cassation Court within the Supreme Court actually introduced the third ground for refusing to initiate bankruptcy proceedings - unreasonableness of the claims of the initiating creditor. "These are the steps that we consider necessary to take within the framework of the current legislation in order to prevent fictitious bankruptcy," the speaker explained.

Further, the judge of the Commercial Cassation Court within the Supreme Court noted that "by another resolution of the specialized chamber we recognized the right to appeal against the ruling to initiate bankruptcy proceedings to secured creditors and thus we are trying to put an additional barrier to fictitious bankruptcy".

During the event the participants also discussed the following issues:

- the need for a regulatory definition of the actions of the insolvency manager in case the debtor's property or the debtor himself is located in the temporarily occupied territory or in the territory where hostilities are being conducted;

- expediency in providing a summarized report on the work performed by the insolvency manager to the commercial court (provided that the relevant powers are exercised in the case of bankruptcy or insolvency) in the event of termination of the insolvency manager's activity upon his written application;

- the expediency of normative regulation of expanding the powers of the commercial court to rule on the impossibility of further bankruptcy judicial proceedings due to the fact that the debtor and his property are located in the temporarily occupied territory of Ukraine or in the territory where hostilities are being conducted.