The future Code of Bankuptcy Procedures will increase the chances of appointing an arbitration manager at the first attempt

The arbitration manager is one of the central figures in a bankruptcy case and has significant functions in analyzing the claims of creditors, keeping and finding the debtor's property, as well as the need to balance the interests of the debtor and the creditors.

The selection of the arbitrator's candidature always gives rise to sharp discussions between the participants in the bankruptcy proceedings. The current Law of Ukraine "On Restoring the Debtor's Solvency or Recognizing It Bankrupt" provides for the need to use an automated system for the selection of the arbitrator's candidature for the first time. The subsequent replacement of an arbitration manager with the use of such a system is no more than the court’s right, not a duty.

The Draft Code of Ukraine on Bankruptcy Procedures (Bill No. 8060) also covered the need for the reform of the institute of the arbitration manager and the order of appointment of such a manager. Thus, it is proposed that, when deciding on the institution of bankruptcy proceedingі, the judge with the help of an automated system will select three candidates who can be appointed as an arbitrator. This approach allows for increase of the chances to appoint an arbitrator at the first attempt with the help of an automated system (in the case of consent from two or three arbitration managers, the court appoints the person who was identified by the automated system first).

In addition, the draft Code provides that the meeting of creditors and the committee of creditors will have the opportunity to replace the candidacy of the arbitration manager, and the court will not, in essence, be able to reject the candidacy if it formally complies with the requirements of the law.

In our opinion, such changes are long overdue in this area and will ensure that at the stage of institution of proceedings in a bankruptcy case there will be appointed the property manager, who will be equidistant both from the debtor and from the creditors. However, the greater powers of creditors in terms of appointment and replacement of the arbitration manager can be used by unscrupulous creditors to abuse the rights granted.