Reasons for initiating administrative cases against arbitration managers

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Published: September 19, 2019

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Conducting a bankruptcy procedure for a legal entity or individual requires the direct participation of a specialist in this field, who not only analyzes the entire existing situation, but also carries out various activities aimed either at stabilizing the situation in a company or a specific individual, or at repaying existing debts to creditors .

• The concept of an administrative manager in bankruptcy proceedings
• Approval procedure
• Rights and obligations of the administrative manager within the bankruptcy process Responsibilities
• Rights

What is an administrative manager?

The administrative manager is a key figure in the bankruptcy procedure at the stage of financial recovery. To be appointed to this position, a person must meet the following requirements:

• be a citizen of the Russian Federation;
• be a member of a self-regulatory organization (SRO);
• have a higher education and at least one year of experience as a manager;
• train as an AU assistant for at least 2 years;
• pay required contributions to the SRO;
• successfully pass the theoretical exam according to a special program;
• have no criminal record.

Appointment of an arbitration manager at the stage of financial recovery

An arbitration manager is a general concept that unites all managers who are involved in the bankruptcy process. Depending on the stage introduced in relation to the debtor, the court appoints a temporary, external, administrative or bankruptcy trustee. Administrative manager at the stage of financial recovery, external - at the stage of external management, bankruptcy - during bankruptcy proceedings. Despite the different names, these powers are often performed by one person.

Information

The administrative manager is appointed by a court decision from among the members of a self-regulatory organization chosen by the debtor or creditors. His powers are valid from the date the financial recovery stage is entered until his release or removal by court decision. The candidacy of a manager is approved on the basis of his professional competence, work experience and lack of personal interest. His powers cannot last more than 2 years - the maximum period of the financial recovery stage. He remains in office until the stage of external administration begins or the debtor is officially declared bankrupt and the stage of bankruptcy proceedings is entered.

An administrative manager may be removed early from his duties:

• at your own request;
• at the request of a self-regulatory organization in case of disqualification or exclusion from its ranks;
• upon a complaint from creditors or a debtor.

Both the approval and the appointment of the AU are within the full competence of the arbitration court.

End of external control

Completion of the external management stage means a transition to settlements with creditors or declaring the debtor enterprise bankrupt and, therefore, the appointment of the next stage - bankruptcy proceedings. All activities carried out during the bankruptcy procedure of a legal entity - monitoring, financial recovery, external management are carried out taking into account the specifics of the organization's activities. If the company is included in the categories of legal entities listed in Law No. 127-FZ, it is necessary to be guided by the regulatory requirements for certain types of debtors.

Rights of the administrative manager

The administrative manager has the right:

• demand from the manager current information about the company’s activities;
• conduct an inventory of the company's assets;
• coordinate decisions and transactions of the debtor;
• transmit information to creditors about transactions and agreements;
• apply to the court to remove the head of the debtor company;
• petition the court to take measures to ensure the safety of the company’s property or to cancel such measures;
• submit demands to the court to invalidate decisions and transactions;
• exercise other powers provided for by Russian legislation.

Rights of an arbitration manager at the stage of financial recovery

The range of rights of the administrative manager is fixed by 127-FZ. It includes:

1. Possibility of requesting information from the head of the company about the current economic situation and relevant documentation.
2. Acceptance of direct participation in the inventory procedure, if it is carried out on the initiative of a legal entity at this stage.
3. Participate in the coordination of transactions and decisions made by the debtor, and, if necessary, transfer the necessary information to creditors.
4. Conduct negotiations with creditors on behalf of the debtor.
5. Apply for the removal of the top management of the enterprise before the court; taking additional measures to preserve assets and property (if there is reason to believe that the legal entity will try to sell/hide its property); on the cancellation of illegal and sham transactions of a legal entity recently.
6. Exercise other powers assigned to him by 127-FZ.

Responsibilities

In addition to the rights, the administrative manager is required to perform a number of duties:

• maintain a register of creditors' claims;
• convene a meeting of creditors;
• review reports on the process of fulfilling the debt repayment schedule, as well as the financial recovery plan;
• provide creditors with an opinion on the progress of fulfilling the debt repayment schedule;
• control the debtor’s timely fulfillment of current creditor requirements;
• monitor the progress of the financial recovery plan;
• monitor the timely and complete transfer of funds in terms of repayment of debts;
• demand from persons who provided security for the debtor’s fulfillment of its obligations to timely fulfill the terms of the agreement;
• perform other duties provided for by Russian legislation.

Employee rights

Once approved by the court, the employee has the right to:

• acceptance of participation in the inventory (if it is carried out by the debtor)
• information about the debtor's current employment
• coordination of contracts and decisions made by the debtor (the employee transmits all information to creditors)
• submit applications to the court with an application for the removal of the debtor, in cases provided for by law, as well as with a requirement to take measures to ensure the preservation of the debtor’s personal property or vice versa
• provide to the court recognition of the invalidity of contracts and decisions that were made in violation of legal requirements
• has the right to carry out actions provided for by the current Federal Law

Responsibility of the administrative manager

If the activities of the administrative manager turn out to be unsatisfactory and lead to losses, he may face the following penalties:

• exclusion from a self-regulatory organization;
• dismissal from work at the request of a meeting of creditors;
• compensation for company losses;
• application of administrative or criminal punishment in connection with large-scale losses.

For your information

The liability of the administrative manager in the event of bankruptcy of a company must be insured. The amount of insurance coverage must be at least 1 million rubles.

Responsibility of the arbitration manager at the stage of financial recovery

In case of unsatisfactory performance of the administrative manager, which ultimately led to losses for creditors, he faces the following penalties:

1. Suspension from work at the request of the creditors' meeting.
2. Expulsion from the SRO for improper performance of one’s functions or violation of the organization’s set of rules.
3. Compensation for losses from actions or inaction: for example, in case of failure to use all opportunities to return receivables or cancel fictitious transactions, etc.
4. Application of other types of liability, up to administrative or criminal punishment when causing large-scale losses.

The liability of an administrative manager in the event of bankruptcy of an enterprise is subject to compulsory civil liability insurance. The amount of insurance coverage is at least 1 million rubles.

Action plan of the arbitration manager at the stage of financial recovery

The main documents that the administrative manager must follow are the action plan and debt restructuring schedule. This important documentation contains the following information:

1. General characteristics of the debtor company.
2. The duration of the plan, the amount of debt incurred, the amount of government subsidies and bank guarantees, if any.
3. Planned results of work.
4. Review of the financial position of the organization (net value, payback period, rate of return, grounds for temporary insolvency).
5. List of measures aimed at restoring the balance of payments.
6. Assessing the need to borrow funds.
7. Justification of sales plan and marketing strategies.
8. Financial plan.
9. Repayment schedule for debts incurred with amounts and dates broken down by creditor.

At the stage of financial recovery, the arbitration manager and the meeting of creditors monitor the implementation of the planned action plan.

Remuneration of the administrative manager

For his work, the administrative manager receives remuneration, which consists of a fixed and interest rate. The fixed part is 15,000 rubles and is paid every month from the profit received by the debtor company.

The second part of the administrative manager's remuneration includes interest, which is calculated based on the book value of the debtor organization. The arbitration manager must receive the due amount within 10 days after termination of his powers. The ranking of this amount is carried out in direct proportion to the book value of the enterprise’s property:

1. Over 250,000 rubles - the remuneration amount is 4% of the amount.
2. From 250,000 to 1 million rubles - 10,000 rubles + 1% of the amount over 250,000 rubles.
3. From 1 to 3 million - 17,500 rubles plus 0.5% of the amount over 1 million.
4. From 10 to 100 million - 41,500 rubles plus 0.1% of the excess amount.
5. From 100 to 300 million is 131,500 rubles plus 0.05%.
6. From 300 million to 1 billion - 231,500 rubles plus 0.01%.
7. Over 1 billion - 301,500 rubles plus 0.001%.

The meeting of creditors, on its own initiative, has the right to establish additional remuneration for the administrative manager. But in this case, the payment for the work of the manager at the stage of financial recovery is paid from the funds of the creditors, and not from the debtor himself.

Salary amount

The income of an employee in this position is divided into two parts: the first is constant, the second is variable.

The constant part of the income averages 20,000 rubles per month and is taken from the profit received during the recovery process.

The second part of the salary is more interesting. The employee receives income, which is calculated from the book value of the company's assets. The level of workload and, of course, the employee’s reward always depend on this indicator.

Table 1. Total remuneration amount.

Watch the video about the actions of a manager during bankruptcy:

Even with small assets of the enterprise, say, up to 10 million rubles, the manager is guaranteed to receive 20 thousand rubles + 28 thousand + 0.2% of the amount of 10 million rubles, which is also 20 thousand rubles. In total he receives 68 thousand rubles, which is not much for such serious and complex work.

The situation is completely different for managers of larger companies. There their income is calculated in millions.

Administrative manager's expenses

All expenses of the administrative manager for the bankruptcy procedure are fully compensated by the debtor. Such expenses include legal costs, publication of messages in the media and on the Internet about the stages of bankruptcy, payment for the services of third-party specialists to conduct audits of financial indicators, asset valuation or inventory.

For your information

If the amount of expenses of the administrative manager seems to creditors or the debtor to be too high and worsens the situation of the organization, then the participants in the bankruptcy procedure have the right to appeal them. In this case, the arbitration manager will pay some expenses from his own funds.

Expenses of an arbitration manager during the stage of financial recovery

The expenses of the administrative manager for carrying out the insolvency procedure of the enterprise must be compensated from the debtor’s funds. In particular, these may be the costs of legal fees, publication of messages about the stages of the bankruptcy procedure in the media and the Internet, and the involvement of third-party specialists to conduct an audit of financial indicators, asset valuation or inventory in bankruptcy.

If the amount of the manager’s expenses seems excessive to the debtor or creditors, leading to a worsening of the already difficult financial situation of the debtor legal entity and reducing the chances of repaying obligations to creditors, then the participants in the procedure can appeal against them. Then the arbitration manager will have to repay part of the costs incurred from his own pocket.

Financial recovery report

Based on the results of its activities, the administrative manager is obliged to provide the court and creditors with a financial recovery plan. The document must contain detailed information about the results of the work to repay the existing debt. The financial recovery report must contain the following information:

• data on the implementation of the financial recovery plan, compliance with the schedule, a list of activities carried out;
• register of creditors indicating the amount of repaid debt;
• information about failure to comply with deadlines recorded in the debt repayment schedule;
• proposals on the subsequent fate of the organization (introduction of the next stage of external management or bankruptcy proceedings in relation to the debtor, completion of the bankruptcy procedure in connection with the repayment of debt obligations);
• data on the results of claims in favor of the debtor's sureties and guarantors;
• data on all petitions of the AU to the arbitration court (for example, on the need to cancel transactions);
• other necessary information.

Administrative manager services: pros and cons

• Financial recovery and debt restructuring. All actions of the manager are aimed at improving the solvency of the enterprise, complying with regulations related to debt restructuring and developing a loyal payment schedule.
• Early completion of the financial recovery procedure. By making every effort and using anti-crisis strategies, an experienced manager can improve the financial condition of the enterprise before the end of the period allotted for the recovery procedure (up to 24 months). This will reduce the overall costs of bankruptcy.
• The ability to minimize costs for financial recovery. If a bankrupt legal entity does not agree with any expenses, they can be appealed by filing a petition with the arbitration court.

Minuses:

• Removal of managers of a legal entity.
  If the administrative manager suspects and collects evidence of unfair management of the legal entity by the current management, he can file a petition with the court to remove them from their positions.
• Removal of the administrative manager.
  If creditors or a debtor have accused the manager of dishonest work, or of being interested in one of the parties, you can file a complaint with a judge. If the arbitration court considers the evidence significant, a new candidate will be approved.
• Expenses of the administrative manager. All costs associated with the financial recovery procedure are borne by the debtor.

Appeal against the actions of the administrative manager

If the administrative manager conducted ineffective activities to restore the solvency of the organization or abused his powers, participants in the financial recovery stage have the right to appeal his actions in court. Based on the results of consideration of this petition, the manager may be held accountable, removed from work, or disqualified. In addition to the court, a complaint can also be transferred to the prosecutor's office, if there are signs of a criminal offense, Rosreestr, a self-regulatory organization or a tax inspectorate.