Agricultural receipts and enforcement proceedings: the first experience

The current Law of Ukraine "On Agrarian Receipts" was adopted by the Verkhovna Rada on November 6, 2012. Then lawmakers introduced in Ukraine a fundamentally new instrument for lending to agricultural producers, on which the future harvest is pledged. Another feature and one of the advantages of agrarian receipts is that they provide for an accelerated extra-judicial enforcement procedure in the event of failure by the debtor to fulfill their obligations under the reprimand. In 2019, Ukraine has already seen the first case of such a solution, and this experience can be considered quite positive.

Compulsory execution of an agrarian receipt is in accordance with the adopted standards of enforcement in Ukraine. The lender, having executed the inscription of the notary, submits to his public or private executor, who in turn opens the enforcement proceedings in accordance with the relevant document. The notary's executive inscription is set out on the original of the agrarian receipt, a duplicate that has the power of the original, or a notarized form attached to the agrarian receipt.

The debtor in such enforcement proceedings will be the person who issued the agrarian receipt to fulfill his obligation to supply agricultural products or to pay cash under certain conditions. The creditor and, in the context of enforcement proceedings, the collector, the agrarian record can be both physical and legal entity that provided cash, services, has delivered the goods or performs work as a counter obligation under the agreement by which the debtor issues an agrarian receipt . The taxpayer may also be a natural or legal person who has legally obtained the rights of the creditor by agrarian letter from another creditor by such a request.

The nature of enforcement proceedings depends on the essence of the corresponding agrarian receipt, which may be commercial or financial. According to the agricultural agrarian order, enforcement of the non-property nature is foreseen, namely the transfer of the pledge to the creditor. Under the conditions of such enforcement proceedings, it is possible to recalculate the products subject to demand depending on its quality. The financial agrarian petition foresees the enforcement of the decision of property character - that is, the collection of funds through the forced realization of the object of collateral. Under such conditions, it is possible to collect the amount of the obligation for the agrarian record, together with the amount of the penalty - a fine or a fine.

If the creditor chose the State Bailiff for enforcement through an agrarian order, the relevant state executor will execute enforcement actions exclusively within the territorial jurisdiction of the internal affairs bodies of Ukraine (oblast / city / district). In the case of the election of a private executor, he opens proceedings within his executive district (as of March 2019, these counties are within the boundaries of the oblasts of Ukraine, with the exception of only Kiev, belonging to a separate executive district), and to execute executive actions the private executor will be able to all over Ukraine. This is a significant advantage over the bodies of the State Bailiffs' Service, since, if the location of the subject of the collateral or debtor is changed, the creditor (payer) will be able to control the process with one person, rather than turn to different ICE agencies, which is usually a rather troublesome thing.

To open an enforcement proceeding with a public or private executor, the payer initially pays the down payment. The size of the agricultural agrarian register will be 2 times the minimum wage for the legal entity and 1 minimum wage for the physical one. Under the financial agrarian notice, the down payment will be 2% of the amount charged, but not more than 10 times the minimum wage. Thus, in order to open the enforcement proceedings, the lender for the agrarian order must provide the executor with an agrarian receipt with an executive inscription of the notary, his application as a payer, a receipt for the payment of the advance payment and documents for identification of the person and his authority

(usually a passport, identification code and power of attorney). In the application, the payer is very important for the creditor to indicate all available information about the debtor and the location of the collateral, as this may facilitate the enforcement of the decision.

It is important to remember that in the enforcement proceedings for agrarian petitions also provides for specific terms. The notary's executive note can be obtained only within 1 year from the day following the date of the date specified in the agrarian receipt. Such a statement in turn will only be valid for 1 year from the day following the date of the commission, during which time the creditor may apply for the opening of enforcement proceedings. After that, within seven days, the transfer of a pledge (owned by the creditor for a commercial agrarian receipt, or for temporary storage for the period of public bidding in the case of a financial agrarian receipt) should be made.

The process of enforcement proceedings on commodity and financial agrarian receipts actually differs only in the form of transferring to the creditor the subject of collateral: either it will be a commodity, or a transfer of funds received from the sale of this product. However, this aspect of the decision-making process is extremely important for the performer. In the case of a commodity agrarian receipt, the task of the executor is to remove the crop or agricultural products specified in the agrarian receipt in the appropriate quantity and volumes and ensure the transfer of such products to the creditor. In the case of financial agrarian receipt, not only involuntary removal of the object of collateral, but also its forced implementation, which requires the involvement of a specialist - the subject of valuation activities - to assess the property. The appraiser forms the report and indicates the appropriate amount corresponding to the value of the property. At the opening of enforcement proceedings, the executor issues a decree on the arrest of the debtor's mortgage, after which he leaves for the location of such property, describes it and imposes an arrest. Recall that private and state executors have full right to compulsory entry into the territory of the debtor - a legal entity (paragraph 5 of Article 18 of the Law of Ukraine "On Enforcement Proceedings").

After the execution of the agrarian petition is completed, the executor returns the pledge to the creditor, and the debtor pays an additional 10% for the work of the state or private executor, which according to the law corresponds to the costs of enforcement proceedings. A public or private executor returns the corresponding notary's executive seal in case of full execution of the decision. If the subject of a pledge could not be found completely, or if the performer did not manage to identify his location, he returned the enforcement document to the collector for further execution of the decision. There are also cases in which the lender (the payer) himself refuses to accept the item of collateral, which also provides for the return of the executive inscription and receipt.

In practice, cases in which an executor can not determine the location of the property that is the subject of a mortgage on an agrarian record, occur quite often. Debtors can hide the relevant property, transport it to various areas. In this case, the executor searches for the relevant property, submits requests to the competent state authorities, checks accounts and financial and accounting documentation, asks individuals who may have information about the location of the wanted property. As a rule, with more perseverance such actions are performed by a private executor, since he receives his own remuneration only in the event of a decision - 10% of the amount of debt. If, however, the search for a pledge item did not yield an outcome, the claimant has the right to initiate the consideration of such a case in court and to protect his rights.

It should be noted that the compulsory execution of agrarian receipts is a compulsory measure, which the lender can fulfill in case of default by the debtor of his obligations. Usually, in non-standard situations, the parties are looking for a common solution through negotiations. As of mid-March 2019, more than 1200 agrarian receipts were issued in Ukraine for a total amount of over UAH 9 billion. Receipts have already proven themselves as an effective tool for farmers to get the necessary funds to finance working capital. However, inevitably, creditors will face unfair debtors and they will have to open enforcement proceedings against the relevant documents.

The first practical experience of compulsory execution on agrarian market replies can be considered positive. On the basis of five agrarian claims, the lenders initiated a forced execution procedure, and the first enforcement was completed in early March 2019. The main lesson from this experience is the readiness of lenders to extraordinary situations, which is a significant factor in the successful recovery. Lenders should have a plan of action in case of non-fulfillment by the debtor of the agrarian receipt, in particular, to know which notary to apply for an executive inscription, and also with which executor to cooperate. It is also important how well the lender knows his client and follows his signals for the rest of the season - sometimes situations arise where the best decision will be a personal meeting of the parties to find an acceptable solution.

Despite the appearance of the first agrarian receipts from the executors, Ukrainian farmers have proven themselves responsible borrowers - enforcement has so far been used less than 1 percent of the total receipts. That is why it is important for producers of agricultural products to understand that it is much more profitable to adhere to their obligations and to fulfill their obligations in a timely manner through an agrarian registration. However, even in cases of enforcement, both private and state executors will act exclusively within the framework of the law and will provide for the collection of only the amount of money or volume of harvest specified in the agrarian receipt. This is primarily in the interests of the agrarians themselves, because only an effective system of debt execution will allow borrowers to continue to lend to producers of agricultural products in Ukraine.

Author: Mikhail Trofimenko, private executor of the executive district of Kyiv region, chairman of the Council of private performers of the Kiev region, member of the All-Ukrainian Association of Private Performers "FACT"


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