Financial manager. One of the key figures in the bankruptcy case

Financial (arbitration) manager

Mortgage debtors (and other secured loans) are “tidbits” for financial managers (especially if the value of the collateral is more than 3 million rubles). The reason is that the financial manager in the bankruptcy procedure of the debtor receives 7% of the money received from the sale of property (7% of 3 million rubles is 210,000 rubles), and there is an opportunity for the manager to earn money.

A person came to one of our offices for a free consultation who had debts on consumer loans in the amount of about 2 million rubles and a mortgage in the amount of about 5 million rubles. The client pulled out the mortgage with all his might; there was no money left to pay off the remaining loans. We explained that in the bankruptcy procedure for an individual, the mortgaged apartment will go under the hammer, but “being half bankrupt” (only for consumer loans) will not work.

Imagine our surprise when we learned that the person had already collected all the documents for bankruptcy and handed them over to the financial manager for preparing and filing a bankruptcy application in court. The financial manager knew about the mortgage, but did not say a word to his future “ward” that the mortgaged apartment would be sold in the bankruptcy procedure of an individual. Probably during the consultation he was already “rubbing his hands” and thinking about where he would spend the 350,000 rubles of remuneration from its sale (5 million x 7% = 350 thousand).

How did this story end?

Unfortunately, this story did not have a happy ending. After our consultation, the person went to collect documents from the financial manager. The documents were returned to him... But the manager threatened to “leak” the information to creditors and begin the bankruptcy process on their initiative. And so it happened, one of the non-mortgage creditors filed a petition to declare this person bankrupt. And who do you think was approved as financial manager? It was the same manager.

Conclusions from this story

We recommend that before telling your story “in spirit” at the initial consultation, you find out as much information as possible about the financial manager, lawyer or law firm. The financial manager should pay attention to:

number of procedures he refused

the presence in practice of bankruptcy procedures initiated by the creditor

This particular financial manager had in his portfolio a large number of bankruptcy procedures initiated by both creditors and the debtor, i.e. "played with different goals." Of course, it is preferable to entrust your bankruptcy to a financial manager who works exclusively in bankruptcy procedures initiated by debtors.

Our company adheres to these principles:

We do not represent the interests of creditors in bankruptcy cases of individuals. Check it out, call us at 8-800-333-89-13, offer us to represent the creditor’s interests in court for a lot of money. You will hear a refusal!

financial managers accompanying bankruptcy cases of our clients do not “play different goals.” Check it out in the Cases Won section of our website.

There was another interesting case in our practice. We had a client with a mortgage who, a few days before the first court hearing, changed his mind about going bankrupt (decided to continue paying off the mortgage). By this time, we had done a lot of work, and the payment from the client was symbolic (in case of bankruptcy on a mortgage, he was given a maximum discount on our services - 90%). Theoretically, we could ignore the client’s request (in pursuit of money - 7% of the cost of the apartment) and begin bankruptcy proceedings. To do this, we just had to come to the meeting and, using a power of attorney, support the bankruptcy petition in court. But this goes against our basic operating principle: clients come first for us! That's why we stopped the bankruptcy process at the last minute. You can get acquainted with this case on the website of the arbitration court: case No. A40-129419/2018.

Action plan

When exercising his powers during the trial, the bankruptcy trustee adheres to the following plan.

1. After his candidacy has been approved by the court, the manager must replace all areas of management of the organization that belongs to the debtor.
2. The manager takes over the management of the organization, and at the same time replaces the debtor.
3. He can enter into relationships with counterparties and forms a bankruptcy estate, which means all the material assets and funds that remain at the disposal of the debtor. It is these assets that should be used to repay debts to creditors.
4. The bankruptcy trustee assumes the authority to receive funds through sale, lease, and also carries out other actions that can bring profit.
5. After all actions for the sale and disposal of property in order to obtain additional assets have been taken, the manager moves on to the next stage. He describes all property and initiates the inventory procedure. It includes carrying out an assessment, as well as the sale of property. At the same time, the sale can be carried out either in one mass, that is, transfer to one owner, or carried out in the form of an auction, when the property is split into several parts.
6. Funds are transferred to creditors' accounts in order of priority. The bankruptcy trustee himself carries out this action and maintains a register of claims.
7. As soon as the funds are paid, he releases claims from creditors whose debt was repaid.
8. The register of claims is closed only when creditors have no claims against the debtor.
9. After completion of all calculations, the state, represented by the Arbitration Court, receives a report on the activities that were carried out by the bankruptcy trustee. Documentation is attached to the report, which has a name and liquidation balance sheet.
10. Upon verification of the report and papers, the manager receives money for his actions and can assume that he has fulfilled all the necessary requirements and obligations.

Remuneration to a specialist for activities carried out

The activities of arbitration managers involve receiving remuneration for the work performed. The amount of payment is regulated by the provisions of Article 20.6 of the Insolvency Law and is a fixed amount, to which interest may be added.

Typically, the insolvency administrator’s remuneration is paid by the debtor, but in this case there may be options. If the borrower files a claim to declare himself bankrupt, he pays a fixed amount immediately. If a creditor makes such an application, the remuneration is paid after the sale of the debtor’s property. Moreover, this payment is a priority - after the sale of property at auction, the arbitration manager receives the remuneration first , and subsequently the creditors’ claims are satisfied.

According to the Insolvency Law, the insolvency practitioner may be paid additional remuneration from the creditor's funds . The amount of payment is not regulated.

Types of AU in bankruptcy

The list of functions performed by the arbitration manager is determined depending on two factors. The first is the stage of the bankruptcy procedure, and the second is the legal status of the debtor, which can be either a legal entity or an individual. Based on these parameters, several types of AC are distinguished:

• temporary. The main functions are the initial assessment of the debtor’s financial condition and ensuring the safety of his property;
• administrative. The key areas of the AU’s work are the restructuring of the debtor’s obligations and the financial recovery of the enterprise;
• external. Engages in full control over the activities of an insolvent organization, solving the problem of fulfilling its financial obligations to creditors;
• competitive. Specializes in repaying debts by selling property owned by a bankrupt company;
• financial. Conducts bankruptcy cases for individuals.

In practice, the bankruptcy manager participates at different stages of bankruptcy, combining the performance of the above functions. This type of work places higher demands on the qualifications and experience of a specialist.

Responsibilities of the AC

The professional duties of the AU are regulated by the same article No. 127-FZ - 20.3 - as the rights. The provisions of the Federal Law oblige a specialist:

• protect the debtor’s property by taking any legal means;
• analyze the current state of the bankrupt and assess various aspects of his activities - economic, managerial, investment, financial, etc.;
• maintain a register of organizations and persons having the status of creditors;
• provide register data to interested parties who have the right to do so within 3 days from the date of application;
• report to regulatory authorities information about administrative violations and crimes identified during professional activities;
• inform creditors about financial transactions and transactions, the completion of which will become the basis for civil liability of third parties;
• make justified and reasonable expenses within the powers granted by No. 127-FZ;
• identify the signs of bankruptcy established by law - fictitious or deliberate, and also bring information about them to the participants in the proceedings in the arbitration court;
• involve third parties in the case if this is required by law and is within the powers of the arbitration manager;
• monitor compliance with procedural requirements during the conduct of a bankruptcy case, including the debtor’s fulfillment of obligations regarding the deadlines for filing applications and petitions.

Another important responsibility of the AU is the need to ensure the confidentiality of information constituting a commercial or state secret that was obtained as part of its professional activities. Disclosure of such information is punishable in accordance with the current norms of Russian legislation.

Frequent violations of the bankruptcy trustee

In practice, violations in the activities of bankruptcy trustees are often encountered. This is due to a lack of attentiveness, meticulousness, and also, in some way, due to a lack of experience.

Example

The bankruptcy trustee is not attentive to the claims of creditors, forgetting to enter them into the register. When carrying out the inventory procedure of the debtor's property, the bankruptcy trustee often makes errors in the assessment, neglecting the services of appraisers. The report is often sent back to correct deficiencies. But I would like to believe that if you are facing a procedure with the participation of a bankruptcy trustee, you will not encounter arbitrariness and mistakes on his part. The outcome of your case depends on the clarity and accuracy of this specialist’s work.

Appealing actions

If for any reason the parties believe that the actions of the bankruptcy trustee are illegal and violate their rights, then they can try to appeal these actions. There are several ways to do this.

1. First of all, you can draw up a petition, which will look like a statement or complaint, and send it to the arbitration court. Upon consideration of your petition, the judge, if there are legal grounds, will issue a warning to the manager.
2. The second way to appeal the action is to file an application with law enforcement agencies. You can contact the prosecutor's office with a statement that your rights are being violated.
3. You can also file a complaint with other government agencies, for example, the Federal Tax Service of Russia.
4. If you want to directly influence the manager, then the complaint must be submitted to the self-regulatory organization of managers where the person who violated your rights operates.

In order for a complaint to be considered and satisfied, there must be compelling reasons. Therefore, before making such requests, seek legal assistance, because only a specialist with in-depth knowledge will help you understand which actions could violate your rights and legitimate interests and which did not. If you nevertheless brought the case to court, then please provide specific arguments that will confirm the wording of your complaint.

For your information

Upon review, the court may satisfy your claims either in full or in part. In a situation where your arguments turn out to be implausible, the court will reject your claims and recognize the actions of the bankruptcy trustee as legal.

Change of bankruptcy trustee

Changing a bankruptcy trustee is a fairly private practice. You can resort to it in a situation if for some reason this person does not suit you, if he was expelled from the organization where he carried out activities, and also, he was removed by the plaintiff or defendant in the case, as well as in a situation if the manager neglected his duties, was dishonest about the responsibilities that might be assigned to him.

The parties must present their demands to the court in the form of a petition. The court is obliged to consider this appeal and make a decision. As a rule, if there is reason to believe that the manager committed a violation in his activities, the court will satisfy the demands of the parties. In exchange, the parties may nominate their candidates for the position of managers. If there are none, then a list of possible candidates from the relevant organization is provided to the court. By joint selection, the defendant, plaintiff and judge are determined on a candidate.

Self-regulatory association of managers

Participation in a specialized self-regulatory association is one of the mandatory requirements for the appointment of an AU, established by the provisions of No. 127-FZ. SROs are non-profit organizations. Their activities are regulated by several legislative and regulatory acts:

• No. 7-FZ, adopted on January 12, 1996 (as amended on August 3, 2018);
• No. 315-FZ, signed by the President of the country on December 1, 2007 (as amended on August 3, 2021);
• PP No. 52, approved by the head of the Russian Government on February 3, 2005.

The purpose of creating an SRO is to transfer control functions from the state to direct market participants. Therefore, the main tasks of any association of arbitration managers are control over the activities of its members and financial responsibility for their professional actions.

When becoming a member of an SRO, the AU is presented with a set of requirements, which are divided into two groups. The first includes qualification conditions for membership in the association, which relate to the level of professional training and work experience of a specialist. Each organization develops its own standard of requirements, which cannot be lower than that established in No. 127-FZ.

The second category includes financial requirements. They consist of the need to pay a one-time entrance and regular membership fee, as well as deposit funds into the compensation fund of the SRO. The purpose of the latter is to create the opportunity for a self-regulatory organization to bear collegial financial responsibility for unlawful or unqualified actions of participants.

Expenses

In the course of carrying out actions aimed at participating in the bankruptcy procedure, the manager may incur expenses. They may be associated with a procedure that is necessary to identify the situation with the debtor’s assets. Also, expenses can be incurred to pay for the work of such specialists as an appraiser, operator, registrar, auditor, accountant, and so on.

Sometimes funds are used to pay for the services of third parties who assist in fulfilling the duties of the manager. All possible situations that are associated with costs are listed in Article 20 of Federal Law No. 127. It is worth noting that in a situation, even if the manager makes payments out of his own pocket, all expenses are reimbursed to him from the funds of the appraiser. This norm is provided for in Article 20. 7.