Bankruptcy

Bankruptcy means that the management of all of the bankrupt’s assets is taken over by a court-appointed official receiver. The aim of bankruptcy proceedings is to liquidate (or, essentially, sell) all assets of the debtor and allocating the funds obtained so to satisfy the creditors according to the ranking of their claim set out in applicable regulations. In principle, an official receiver should not run a bankrupt company or partnership, but in special circumstances laid down in the law, a receiver may carry on a debtor’s business, provided it serves the interests of their creditors. Official receiver’s actions are supervised by an insolvency practitioner appointed for a given case. In the course of bankruptcy proceedings, creditors have influence over the official receiver (dismissal) and the receiver’s actions (supervision) through the Creditors’ Committee, which is a body capable of adopting resolutions. The receiver should sell the assets of the debtor as fast as possible and transfer any funds obtained in that way to the creditors verified, that is included on the list of creditors, in the course of the proceedings. In order to be recognised as a valid creditor, it is required to notify the insolvency practitioner of your claim. The claim verification process provides for the possibility of lodging appeals and then complaints against the contents of a list prepared by an insolvency practitioner if they do not comply with the creditor’s claim. Creditors secured by a collateral (pledge, registered pledge, tax lien, mortgage, maritime mortgage, transfer by way of security) on the bankrupt’s assets are vested with special powers in respect of disposal of collaterals by the official receiver, i.e. they have the right, laid down in detail in the Bankruptcy Law, to claim priority of satisfaction from funds proceeding from the sale of assets secured by their collateral before other creditors.