Paper/Speech Details of Conference Program for the 27th NISPAcee Annual Conference Program Overview Panel: The Rule of Law & Public Administration Author(s) Alla Bobyleva Lomonosov Moscow State University Moscow Russian Federation Lvova Olga, Title The Bankruptcy Law and its Enforcement in Russia File Paper files are available only for conference participants, please login first. Presenter Alla Bobyleva Abstract The article is devoted to the analysis of bankruptcy institute development in Russia. Insolvency system is one of the key factors of increasing the market economy efficiency. The objective of the research is to reveal specific features of Russian insolvency legislation and its enforcement, to identify the main problems and suggest directions for its improvement and integration with global trends. The article describes the main features of current Russian Insolvency Law and its disparity with European approaches, the specific features of informal workouts in Russian insolvency system, the current initiatives to improve the insolvency institution and further directions of modernization. The conducted research allows to make the following conclusions. 1) Despite the constant updating of bankruptcy legislation in Russia, most of the amendments contain only partial changes and do not address conceptual issues of bankruptcy: improving the effectiveness of recovery procedures, increasing debt repayment. 2) The traditional understanding of informal workouts as out-of-court agreements between distressed companies’ management and their creditors can be completed by governmental actions for state support to a particular company. The results of these widespread informal workouts in Russia can be both positive and negative. On the one hand, the selective governmental support may give a fresh start to a business and a unique chance for a recovery. On the other hand, such informal workouts may artificially prolong life of actually unviable business, increase losses for all stakeholders or contribute to the development of criminal corruption schemes. The practice of Insolvency Law implementation shows the possibility of its “creative” application when institution of bankruptcy is used for repartition of the property, corporate raiding, failure to meet obligations. A large number of informal workouts is not always transparent and accountable and the rule of law is not the main principle in their implementation. 3) We see the following main priorities of Russian insolvency institute modernization: prevention of bankruptcy by so called “pre-packed bankruptcy” and “pre-packed sales”; strengthening rehabilitation opportunities within insolvency procedures by the development of tools for reorganization of operational, investing and financial activities of distressed companies; making the remuneration of insolvency administrators more result-oriented by introduction a transparent scale of stimulation and motivation of their interest in increasing the number of rehabilitation cases, the value of distressed business and (or) its assets for sale; development of market approach in the support of large-scale “strategic” companies; transformation of international collaboration concept from protectionism to the international cooperation, coordination of efforts, transparency, fairness, reduction of prices of international insolvency proceedings. The main directions of insolvency institute modernization in Russia should be implemented through the adoption of a full-scale new Insolvency Law: the fundamental changes are impossible on the basis of the random amendments to the current Law. It is also important to change public opinion: to move from a current understanding of bankruptcy as a purely liquidation procedure and business collapse to the perception of insolvency proceedings as the possibility to restore distressed company and give the fresh start.
