Bankruptcy of any company is represented by a long and complex procedure, implemented in successive stages. Certainly, that a particular company will be declared insolvent, all creditors are notified. Additionally, information is published in open sources. This allows each lender to submit claims on the company. The arbitration manager additionally appoints and holds a meeting of creditors in bankruptcy. It makes various important decisions, as well as evaluates the work of the manager.
First meeting
Before holding a meeting of creditors in bankruptcy, the court initially appoints a temporary administrator. He is engaged in observation, the main purpose of which is to study the financial condition of the enterprise. All features of the company’s work are analyzed, and lenders are identified.
It is the arbitration manager who sets the date for the first meeting of creditors. Bankruptcy proceedings without this stage will be declared illegal. The first convocation solves several important tasks at once:
- recognition of the manager appointed by the court, worthy for further work with the bankrupt, for which a vote is being taken;
- a strategy is being developed on the basis of which further actions will be carried out by all participants in the process;
- a vote is taken by which it is decided whether bankruptcy proceedings will be held immediately or whether external management will be carried out;
- it is decided whether there are grounds for drawing up a settlement agreement;
- identifies opportunities for restoring the solvency of the debtor company;
- a committee of creditors is formed and approved, for which a vote is taken by all creditors with voting rights.
Each participant can submit his own application, on the basis of which other issues are considered. The meeting of creditors in case of bankruptcy of a legal entity acts as a significant collective body, the possibility of which even includes a change in the appointed manager. Creditors may participate in the first meeting if they present their claims to the debtor within a month after the information on bankruptcy has been published in open sources.
How are events held?
Bankruptcy meeting of creditors is held only on weekdays from 8 to 20 hours. Participants consider many issues, which include:
- is it possible to restructure the debt;
- whether it is possible to carry out rehabilitation by different actions;
- the amount of remuneration for the manager is determined;
- the probability of using a settlement agreement is estimated;
- issues a verdict on the initiation of bankruptcy proceedings.
All participants must be notified in advance of the agenda. Based on the Law on Bankruptcy, a meeting of creditors makes decisions based on a vote.
Protocol Rules
During the meeting, a protocol must be kept. Within 5 days after the event, this document is sent to the arbitration court. Often, one copy is transferred to the arbitration manager.
Without fail, the following data are entered into the protocol:
- information on the bankruptcy directly provided by the legal address, company details, name and other data;
- information shall be entered on the arbitration court in which the case is being examined;
- information about the direct event is indicated, for which purpose the place and date of the event, the grounds for the procedure, as well as the agenda are indicated;
- all participants of the event are listed, as well as the number of votes available;
- information about all persons speaking at the event is entered;
- data on various petitions are indicated;
- The voting procedure and decisions taken are recorded.
Copies of ballots, the register and other documents used at the meeting are attached to the protocol. The most important in bankruptcy is the holding of the first meeting of creditors. The procedure may end with the drafting of a settlement or the start of bankruptcy proceedings.
What problems are solved?
At a meeting of creditors in bankruptcy, really many different issues are considered, which include:
- a decision is made regarding the possibility of reorganization, external management or bankruptcy proceedings;
- different plans for further action are being approved;
- various activities are being developed;
- creditors may not approve an approved manager;
- the amount of remuneration for a specialist is determined;
- assesses the possibility of drawing up a settlement agreement;
- petitions are filed with the court regarding the recognition of the debtor, represented by the company or a private person, insolvent;
- All questions regarding the activities of the creditor committee are considered.
The decisions taken are entered into the protocol, after which this document is sent to the arbitration court.
Members
A meeting of creditors in a bankruptcy case is held with the participation of numerous persons who are creditors to the debtor. They have the right to vote based on the size of the debt.
Most often, creditors are counterparties and various government agencies, as well as banks. Interested parties, which include employees of the company, founders or heads of departments, cannot participate in a meeting of creditors in bankruptcy.
Bankrupt may take part in the meeting, but this is not required. The event should be attended by at least 50% of the total number of creditors with voting rights.
What rights are given to participants?
The basic right of creditors is the right to vote, on the basis of which they make different decisions regarding the debtor.
At a meeting of creditors in the event of the bankruptcy of an individual or company, participants can make different proposals or discuss important issues. If necessary, you can appeal the decisions taken by the court.
How are participants notified?
All participants must be notified in advance of the meeting of creditors. To do this, they are sent an official notice. It indicates when and where the meeting of creditors will be held. The Federal Law “On Bankruptcy” indicates the need for notification of the event of all creditors, without exception.
Lenders must be notified 5 days before the event. The notice includes information about which issues will be addressed. In addition, other materials related to the agenda are attached to it.
If the document is sent by mail, the process is carried out 2 weeks before the appointed date. If a citizen has not received a notice in a timely manner, and at the same time can prove this fact, then all decisions taken at the event can be canceled by a court decision.
Distribution of notifications is carried out by the initiator of the event, which is usually the arbitration manager. Information about the events will certainly be transferred to the bankruptcy registry.
Can it be conducted in absentia?
In bankruptcy, the first meeting of creditors must be in person. But often other meetings are required, for which it is allowed to use electronic voting. In this case, the personal presence of participants at the event is not required.
For such an event, special communication channels are used.For this, the arbitration manager enters into a contract with a pre-selected operator. Using this method, confidentiality and speed of voting is ensured.
The protocol drawn up after such an event is approved by the signature of the manager or organizer of the event.
When preparing a notice, it is important to include a link to an electronic resource in this document, where there is data about the planned event.
Terms of implementation
The first meeting must be held within 10 days after the end of the observation procedure. Further meetings are held as necessary, but usually every three months.
If creditors wish to hold an extraordinary meeting, then they present a corresponding request to the manager. He reacts to this document within 3 weeks, after which he organizes the event.
Is it possible to postpone?
The meeting may be postponed if an appropriate decision is made by the arbitral tribunal.
Usually, the reason for such a measure is the presence of claims in court that have not yet been considered, so it is required to include other persons in the register of creditors. But the only condition is that the requirements for such applications must be substantial, so they can affect the outcome of the meeting.
When is invalid?
There are certain reasons why the results of a meeting may be declared invalid. These include:
- infringe the rights and interests of direct creditors or third parties;
- less than half of all creditors participated in the voting;
- there are creditors who were not notified of the meeting, and they also have official evidence of this fact.
Other creditors or the direct debtor may appeal decisions made at the meeting. Often, it is the court itself that considers that specific decisions are illegal, as a result of which they are canceled.
The court has the right to review any decision made, and especially with regard to the sale of debtor property or external management. He receives the minutes of the meeting within 5 days after the event. The judge analyzes the decisions taken and their consequences. If, for various reasons, he believes that the rights of third parties or the debtor are violated, he cancels such a decision, as notified by the arbitration manager. The specialist sends appropriate notifications to all creditors.
Often, creditors generally want to change the manager appointed by the court. They have the authority to do this, and they can choose their own SRO managers. A specific candidate is proposed to the court, which makes the final decision.
Conclusion
The meeting of creditors is represented by a unique collegial body formed during the bankruptcy of any private person or enterprise. It includes all persons who have requirements for the debtor. Events are held on weekdays with prior notice to all participants.
For certain reasons, decisions made at a meeting are invalidated. They should not in any way infringe upon the rights or interests of third parties.