HOW TO KEEP THE PROPERTY OF THE DEBTOR DURING THE BANCRUPCY PROCEDURE??? WHAT TO DO IF THE CREDITOR DOES NOT ALLOW THE TRANSFERRING OF THE MORTGAGED PROPERTY FOR STORAGE?

The position of courts according the agreements on the transfer of property of bankrupt into possession, usage and storage to other person, which were concluded during the bankruptcy procedure was negative until recently. Particular, college of judges of the Chamber of the economic affairs of the Supreme Court of Ukraine in the Decree from 12 September 2006 said: “An Agreement on the transfer of the property of a bankrupt to the possession and usage of another person which is concluded in violation of the requirements of the Law of Ukraine “On restoring the debtor’s solvency or recognizing it as a bankrupt” regarding the consequences of the recognition of the debtor as a bankrupt and the liquidator’s powers regulated by him is invalid.”

But how then to keep the property bankrupt during the bankruptcy procedure???

Lawyers of “Goretskyy & Partners” Law Firm know the way out of the situation!!!

On 27 June 2017, with the participation of representatives шт the judicial process – lawyers of the “Law Firm” Goretskyy & Partners ” the Supreme Economic Court of Ukraine upheld the legal position of lawyers of the” Law Firm “Goretskyy & Partners” where the representatives of Debtor defended the preservation of the property of the operating plant and did not allow the “RUIN” of the Enterprise.

In fact, in order to preserve the property of the Bankrupt in the proper (working) state, preventing the decrease of its value and economic attractiveness, the committee of creditors made a decision on the transfer of the property, which was in the mortgage at the Bank, to the responsible storage of a third party by concluding the relevant contract.

Disagreeing with such a decision, the Bank, as a mortgage lender, appealed to a court with a claim for invalidation of the Contract of Custody (Maintenance) in the proper (working) state of the debtor’s property in accordance with Art. Art. 203, 215 of the Civil Code of Ukraine.

The Bank substantiated its legal position as inconsistency of the Contract of responsible storage of property under the provision of Part 2 of Art. 586, part 2 of Art. 829 of the Civil Code of Ukraine, since it was concluded without the consent of the mortgagee and with the creditor of the debtor.

So according to Part 2 of Art. 586 of the Civil Code of Ukraine, the Mortgagor has the right to alienate the object of the collateral, to transfer it for use to another person or otherwise dispose of it only with the consent of the mortgagee, unless otherwise specified by the contract or by law.

That means that the provisions of this article of the Law regulate the obligation of the Mortgagor to agree with the Mortgage of the alienation or transfer to the use of the property to a third person who is in the pledge of the Custodian.

However, if a mortgage lender objects to the conclusion of such an agreement and does not provide alternative offers on the maintenance of the Debtor’s property in relation to which the liquidation procedure has been opened and who is not able to hold the property that is in the pledge. IN THESE CIRCUMSTANCES A QUESTION IS CREATED – WHO ARE RESPONSIBLE IN THE CASE OF THE “RUIN” OF THE PLANT – BANK, STATE OR CAN THE DEBTOR’S LIQUIDATOR ???

In the present case, rejecting a cassation appeal of the Bank (the mortgagee) Supreme Economic Court of Ukraine concluded that since the violation of the debtor’s case on bankruptcy he is in a special legal regime that changes the whole complex of legal relations of the debtor and special rules of the Bankruptcy Law have priority in the application when considering bankruptcy cases concerning other legislative acts of Ukraine, in particular, the provisions of Part 2 of Art. 586 of the Civil Code of Ukraine.

Supreme Economic Court of Ukraine noted “… From the treaties it is not seen that they affect the legal relationship that is the subject of this dispute and serve as the basis for the satisfaction of the claim for invalidation of the contract of responsible storage (maintenance) in the proper (working) state of the debtor’s property, namely, as a storage contract Property of a Bankrupt in a bankruptcy case, the legal relationship of which is regulated and expressly provided for by the special rules of the Bankruptcy Law, with the introduction of another legal regime of legal relations between economic entities the bankruptcy of withdrawal, including restrictions on the disposal of property of the debtor as a result of bankruptcy to preserve the deterioration of debtor’s property and to prevent deterioration of the collateral. … “.

In addition the Court noted that the purpose of concluding such an agreement is to maintain the proper (working) state of the debtor’s property which indicates the provision, first and foremost, of the rights of the Bank, which is a mortgage lender, since the contract is directed to the preservation of the property that is the subject of claims Bank and preventing the deterioration of the state of the object of collateral (mortgage).

SUMMARIZING CONCLUSIONS REACHED BY THE CASSATION COURT IT SHOULD BE NOTED FOLLOWING.

The conclusion, during the liquidation procedure, of the arbitration manager with the third party of contracts of responsible storage of property, does not contradict the clauses of the current legislation and regulated by the provisions of a special Law (Law of Ukraine “On restoring the debtor’s solvency or recognizing it as a bankrupt”).

The Supreme Court of Ukraine, by a decision dated August 3, 2017, refused to allow the Bank to admit the case to the Supreme Court of Ukraine in the absence of grounds for review of the decision of the Supreme Economic Court of Ukraine.

Managing partner of “Goretskyy & Partners” Law Firm Attorney Oleg Goretskyy, Lawyers of “Goretskyy & Partners” Law Firm Maryana Goretska, Svyatyuk Svyatoslav.

A link to the Decree of the Supreme Economic Court of Ukraine below
http://www.reyestr.court.gov.ua/Review/67634436.