FINAL HEARINGS IN THE BANKRUPTCY (INSOLVENCY) CASE

Abstract

This scientific article is devoted to problematic issues of legal regulation of the final hearings in the bankruptcy (insolvency) case. The actuality of the topic is conditioned by the significant consequences for the debtor, which will determine the further legal fate of the insolvent entity based on the results of the final court hearings, up to its liquidation with the assets’ realization in a compulsory manner. The author revealed the essence and features of the final hearings in the bankruptcy (insolvency) case, identified problematic issues that arise for law enforcement bodies at this stage of the bankruptcy procedure, and made proposals for improving the legislation of Ukraine in this part. In particular, the author proved that at the initial stage, the legislation on bankruptcy in independent Ukraine did not provide the mandatory holding of a court session where the legal fate of the debtor would be decided, at first such an obligation was developed by judicial practice, and later by the Law on Bankruptcy in the version of 1999, the name the final hearings of the court and the procedure for its conduction were established by the Bankruptcy Law in the 2011 version, further changes to the bankruptcy legislation in the 2018 version of the Code of Ukraine on Bankruptcy Procedures affected the final hearings only in relation to the discretion of the court. In addition, the author identified similarities and differences between the final hearings in the bankruptcy procedure and the court session in the regular trial; it is substantiated that the final hearings does not resolve the dispute on the merits, but the presence or absence of the debtor’s signs of bankruptcy or obstacles to the progress of the case will be established, and the concept of the final hearings is formulated as a court session at which the court administers justice with limited judicial discretion through a differentiated study of written documents evidence regarding the financial and economic condition of the debtor for the purpose of establishing the presence or absence of signs of bankruptcy or obstacles to the progress of the case with the subsequent resolution of a decision or court order. The author proved that the judicial practice of the Supreme Court does not always take into account the tasks that the legislator sets before the court in the final hearings, in particular, the Supreme Court does not see the difference between insolvency and non-payment pf the debtor, because the category of payment inability as a prerequisite for non-payment is used at the stage of the preparatory hearings when opening a bankruptcy case, when a non-payment is one of the signs of bankruptcy and, accordingly, must be established by the court precisely at the final court hearings to resolve the issue of transition to the next court procedure (rehabilitation or liquidation). The author also argued that in cases where there are no signs of bankruptcy of the debtor’s legal entity, and the deadline for the property disposal procedure has passed, the court should close the bankruptcy case. And, finally, analyzing the insolvency procedure of natural persons, the author substantiates that when deciding on the transition to the next court procedure, the court in the final hearings evaluates the actions of the natural person of the debtor everywhere through the prism of his bona fide behavior both before and upon the commencement of insolvency proceedings, since only a bona fide debtor is entitled to the benefits provided by the legislator in the insolvency procedure, and the insolvency proceedings should be terminated in relation to a male fide debtor. At the same time, since the peculiarity of proceedings in insolvency cases is manifested in the debtor’s ability to pay off debts to creditors using both his existing property and his legal personality, the debt repayment procedure should be of an exclusive nature, giving priority to planned restructuring.