The Co-authored paper of Nemanja Aleksić Ph.D. and professor Vladimir Kozar Ph.D. presented at the XXX jubilee meeting of the business lawyers of Serbia
Professor Vladimir Kozar has presented the co-authored paper conducted in co-operation with the Attorney at Law, Nemanja Aleksić Ph.D., titled “The transfer of rights and obligations to the bankruptcy administrator as a consequence of the opening of bankruptcy proceedings”, at the XXX jubilee meeting of the business lawyers of the Republic of Serbia, which took place in Hotel “Mona” in Zlatibor, from September 11 to September 14, 2022, organized by the Association of Business Lawyers of Serbia.
The paper includes an analysis of the legal provisions, judicial practice, and opinions of the jurisprudence on the transfer of rights and obligations to the bankruptcy administrator as the most important consequence of the opening of bankruptcy proceedings borne by the bankrupt debtor, which leads to the unification of the representative and the management function within one person – the bankruptcy administrator, while the members and shareholders retain the ownership function with significant limitation of rights. The view on the admissibility of the majority shareholder’s appeal against the decision to open bankruptcy proceedings was presented.
The conclusions are as follows:
The management and the representative function are unified in the entity of a bankruptcy administrator, due to the fact that the representative and management rights of the directors, representatives, and proxies, as well as the management and supervisory bodies of the bankrupt debtor, cease on the day of the opening of bankruptcy proceedings, resulting in the transfer of these rights to the bankruptcy administrator.
The owners of the capital of the bankrupt debtor do not lose their status on the day of the opening of the bankruptcy proceedings, but on the bases of the ownership function, they can exercise only those rights that are expressly recognized by the bankruptcy law – a right to submit an objection to the proposed sale, to submit a reorganization plan, as well as the right to an excess of the divisional mass. In addition, the majority shareholder of the bankrupt debtor has legal standing to appeal against the decision to open bankruptcy proceedings.
The consequences of opening of bankruptcy proceedings include the limitation of the legal capacity, considering that the bankrupt debtor can no longer be the bearer of the rights and obligations as he was prior to the opening of bankruptcy proceedings, but can only complete the unfinished business activities, as well the complete loss of the capacity to contract, given that all corporate bodies, representatives and proxies lose their functions, and the bankruptcy administrator is registered within the Business Registry Agency as a sui generis legal representative.
In jurisprudence, there are different understandings of the legal position of the bankruptcy administrator. According to the Publicist theory, the bankruptcy administrator is an official judicial body, according to the Theory of representation he is the legal representative of the bankruptcy estate, while according to the Mixed theory, he is a public legal body that represents the debtor and creditors or is the trustee of creditors.
In the event of the annulment of the decision on the opening of bankruptcy proceedings, the bankruptcy administrator, appointed by the annulled decision, without it being separately ruled by the court, continues to perform the function of a temporary bankruptcy administrator until the issuing of a new court decision based on the proposal for the opening of bankruptcy proceedings.
The bankruptcy administrator’s liability for damage caused by the participants in the bankruptcy proceedings in the performance of their duties is limited to qualified forms of guilt, meaning they are only liable for intent or gross negligence, and not for ordinary negligence. The great legal powers of the bankruptcy administrator are not accompanied by the simultaneous prescription of the appropriate form of culpability when it comes to his responsibility for the damage.
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