10 January 2013
Alert

On bankruptcy procedure of Aerosvit

On 29 December 2012, pursuant to the order of the Commercial Court of the Kyiv Region, the bankruptcy proceedings in respect of Aerosvit were initiated based on the application of the debtor. Pursuant to the said order the court introduced the procedure of administration of debtor's assets, appointed the administrator of assets and imposed moratorium on satisfaction of creditors' claims.

The subsequent (preparatory) hearing is scheduled for 23 January 2013. In accordance with the current version of the Bankruptcy Law, the court will resolve the following issues in the course of this hearing:

  • amount of the creditors' claims;
  • date for filing of the register of creditors' claims by the administrator (such register should be prepared and submitted to the commercial court within 70 days after the date of the preparatory hearing);
  • date of preliminary court hearing (such hearing should be held within 90 days after the date of the preparatory hearing);
  • date of calling of the first general meeting of creditors (such meeting should be held within 100 days after the date of the preparatory hearing);
  • date of court hearing, in the course of which the court should issue an order introducing rehabilitation procedure of the debtor or declare the debtor as a bankrupt and commence the liquidation procedure, or terminate the bankruptcy proceedings (such court hearing should be held within six months after the date of the preparatory hearing).

The ruling (passed as a result of the preparatory meeting) may be appealed in accordance with the established order.

In other words, it is most likely that during the week (from 23.01.2013 ongoing) pursuant to effective legislation the announcement of Aerosvit bankruptcy will be published. This, in turn, will entail the need of creditors within 30 days as of the date of publication, to declare their claims to debtor. Non-declared within that period creditors' claims shall be deemed liquidated and cannot be specified any longer. The period is critical and cannot be renewed.

After the expiration of the said 30-day period claims declared by the creditors and the claims indicated both by the debtor and the trustee will be subject to consideration.

The next step is a preliminary hearing in the bankruptcy of Aerosvit case, which will be held not later than 3 months as of 23.01.2013. At this hearing, the court shall consider all claims of creditors and approve the relevant register of creditors' claims.

After the preliminary court hearing a general meeting of the creditors is to be convened, at which a committee of creditors consisted of not more than 7 persons is to be elected (afterwards the committee will appoint the chairman of the creditors' committee).

After these steps the debtor shall be subject to one of the following court proceedings:

  • settlement agreement (between the debtor and creditors);
  • sanitation (financial restructuring);
  • liquidation (sale of all creditors' assets, satisfaction of creditors' claim if possible and exclusion of the debtor from the registry);
  • the creditors committee (by simple majority) shall decide which procedure to use and submit its decision together with appropriate application to the court;
  • each of the mentioned procedures is quite complicated and if there is a need it can be analyzed separately. However, it is most likely that Aerosvit will be liquidated.

Also, please note that the information provided on the stages and deadlines is given for the "perfect" version of bankruptcy procedure. However, there is a high probability that the interested creditors (or the debtor) may appeal certain judgments and use it as a formal grounds for foot-dragging of bankruptcy procedure (for instance, Aerosvit may undertake such steps in order to remain in the procedure of the disposal of the property, when there is a moratorium on satisfaction of creditors' claims and it can carry on its business activities).

For further information please contact
managing partner Oleksiy Didkovskiy and counsel Dmitriy Marichev

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