The Civil Code of Ukraine, in particular Article 149, grants the Creditor the right to recover a share of the property of the Limited Liability Company proportional to the share of the Participant, the Debtor of the Company in the authorized capital, in respect of his personal debts, in the event that he does not have enough other property for satisfaction of the Lender's requirements.
The provisions of this article first divide the debts of the Participant - Debtor Society and the debts of the Society itself. At the same time, the Lender does not allow the Lender to meet his claims at the expense of the Company's property in the event that the Debtor (the Participant of the Society) does not have any other property on which it is possible to recover the debt, for the purpose of repayment of debts.
Litigation clearly states that the confirmation of absence from the debtor of other property that can be recovered is solely the data of enforcement proceedings, which establishes that such property is not discovered, or that its value does not reimburse the amount of all creditor claims.
Subsequently, the Lender obtains the right to two ways of satisfying his claims:
1. To demand payment of the value of part of the property, which corresponds to the share of the debtor - the Participant of the Society;
2. Require allocation of the relevant part of the property of the debtor - the Participant, for recourse to it for collection.
In order not to initially create illusions of the Lender, I would like to draw attention to the fact that these two methods are exhaustive and do not give either the right or the ability of the Lender to become a Participant of the Company in the amount of the Debtor's share.
The part of the property to be allocated or the amount of funds that make up its value will be established in accordance with the balance sheet, which is made on the date of presentation of the requirements of the Lender.
This is one of the main problems that the Lender will face, because it is precisely the definition of the value of Debtor-Participant's share in the property of the Company being the most complex procedure and depends on many factors, the skill of lawyers and the efficiency of preventive actions for the correct collection of evidence base in the future litigation.
The High Specialized Court of Ukraine for the Examination of Civil and Criminal Cases (Resolution of 07.09.2014 in the case No. 6-55212sv13) created a practice in this regard, establishing that the cost of a stake will be determined as proportional to its share in value terms of the total assets of the Company, for minus his liabilities.
It is also necessary to take into account the risks associated with the possible impairment of corporate rights, as well as the risks of alienation of a share until it is foreclosed.
You can try to avoid such risks by applying security measures (arrest, prohibition on alienation) regarding corporate rights, but it can not guarantee absolute success, and it can not guarantee the decency of the Debtor who will try or make a series of transactions, in order to complicate the foreclosure of corporate rights
In the future, of course, it is possible to challenge the data of the agreement and registration actions, committed on their basis, armed with the practice of the USSR (Decree of 21.12.2016 in the case No. 363/4091/14-ts), but this will substantially complicate the process of satisfying the requirements of the Lender.
The solution to this problem is due to our legislators, who, by amending the legislation, could oblige state registrars to make and, in the future, check encumbrances in the State Register of encumbrances of movable property.
To date, unfortunately, the legislation of Ukraine does not define the mechanism and procedure for the enforcement of corporate rights.
The very Law of Ukraine "On Enforcement Proceedings", in Article 10, only defines the enforcement of corporate rights as one of the measures for enforcing a decision, however, no word speaks about the mechanism for its implementation.
Therefore, in practice, there are two opposing views - who can initiate foreclosure on corporate rights - or a performer who enforces a court decision, or the Lender himself.
In favor of the first speaks st. 379 of the Civil Code of Ukraine, which provides that the allocation of a part of the debtor's property in the property, which he owns in common with other persons, shall be decided by the court upon the submission of the state executor.
In favor of the other says Art. 149 of the Civil Code of Ukraine, which stipulates that the right to demand the allocation of a share for foreclosure belongs only to creditors who have property claims to the debtor, and not to the executor.
At present, the jurisprudence tends to a second opinion, as reflected in the Supreme Court Resolution of September 17, 2014 in the case 6-31tss14.
As a lawyer practicing corporate law for more than 15 years, I support the second opinion, based on the fact that foreclosure on the property of the Society implies the need to apply to a court with a separate claim.
As a result, the Lender will have to undergo the following steps:
- Obtain the necessary documents of enforcement proceedings, the lack of property which may be subject to foreclosure, in addition to corporate rights;
- To apply to the court, before filing a claim, with a statement on the application of security measures by arrest and the prohibition of the alienation of corporate rights in order to fix the preponderance of the right to meet their claims at the expense of corporate rights against other creditors.
- To sue the Company for the allocation of the share of the Participant - Debtor and obtain the corresponding executive document.
At the same time, it is obligatory that the debtor be directly involved as a co-respondent, since the foreclosure of the Company's property will terminate or reduce its rights to a share in the authorized capital of the Company, as well as as third parties, without independent requirements, other members of the Company - since a court decision can also affect their rights and obligations.
This is stated in the Resolution of the USSR in the case No. 6-40159sv14, which clarifies the quantitative composition of the parties in this category of litigation.
Forming Claims The lender must clearly identify the method of recovery:
- or to collect funds from the Company within the cost of the Debtor's share;
- or to levy on the property of the Company, within the cost of the Debtor's share.
I draw your attention that in determining the cost of the Debtor's share, the Lender will need to have access to the documents of the Company.
This, with a view to ensuring the possibility of reclaiming them from the Company in court, entails the need to bring the court to the effect that the Lender can not obtain these documents on its own.
In connection with this, we practice appeals to the court also with the petition for the request of these documents to the Company on the basis of the court order, which significantly disciplines the officials of the Company, due to the existence of criminal liability for non-enforcement of court decisions.
Having received a positive decision of the court, the Lender also has to undergo a new way of executing a decision on foreclosure or its value, which will be allocated as a share of the Participant - Debtor in the authorized capital of the Company.
Summarizing the above, it should be noted that foreclosure of corporate rights is a rather troublesome and not very fast procedure.
In addition, given the fact that many Debtors do their best to devalue corporate rights, often such a long road in the dunes becomes economically unprofitable for the Lender.
Nevertheless, I recommend not to discard this possibility of the Lender from repayment of claims due to the property of the Company, which has the ownership interest of the Debtor-Participant.
Moreover, monitoring of the Register of court decisions confirms my recommendations, the presence of many positive decisions made in favor of the Lender.
Posted by Alexander Nagorny
(translated using google translate)