NEWSLETTER

ON ENTERPRISE RESTRUCTURING

#10 June 2001

Dear reader,

In this issue of the Financial Restructuring Bulletin we continue our dialogue with everyone involved or interested in the problems of financial restructuring. The main issue discussed today is the efficiency of the current law on restoration of solvency of the debtor or bankruptcy. On June 7, 2001, the Verkhovna Rada passed in the first reading the Law of Ukraine "On Changes and Amendments to the Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". This draft Law was prepared with the direct participation of USAID Financial Restructuring Project (FRP) and introduced for consideration of the Verkhovna Rada by People’s Deputy V.A. Zachosov. You can find the complete text of this draft Law on our web site: www.bkrtcy.kiev.ua.

Further, our lawyers have prepared a brief analytical overview of the main changes that were passed in the first reading. We trust you will find this overview of interest.

For those of you who are interested in the positive experience of the Agency and the Association of Arbitration Managers, the interview with Mr. Rzhepishevsky, the Head of Bankruptcy Agency in Odessa, Kherson, and Mykolayiv oblasts, should be useful.

FRP continues creating a network of regionalised training and advisory centers in different oblasts of Ukraine. Thus, a regional office was opened in May in Sevastopol. Mr. Sergiy Oskin, the Center Director, provides his vision of this Center’s aims and future activity. In late July, the Sevastopol Center will host two seminars. The first four-day seminar will be for certified solvency restoration practitioners, and the second – to familiarize Crimean enterprises with the opportunities provided by solvency restoration legislation.

The sixth center was opened in Donetsk this July. We will give you more information about it in our next issues. The main task of such training and advisory centers is to organize information and training seminars for solvency restoration practitioners and enterprises.

In June of this year, the Ivano-Frankivsk Center held four seminars on "The Law of Ukraine ‘On Restoration of Solvency of the Debtor or Declaring It Bankrupt’ as a Vehicle for Saving Ukrainian Business". These seminars hosted about 200 attendees.

Dnipropetrovsk Center held its’ first "Lessons Learned" conference. You can find more details about the conference in the section "Our Seminars".

On June 25, 2001, FRP held a seminar for the banking community: "Application of Provisions of the Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". Representatives of 27 Ukrainian banks attended the seminar. It was chaired by Mrs. A. Palamarchuk, the Vice-President of the Ukrainian Banks’ Association. You will find a detailed report on this seminar below.

In Issue #6 of our Newsletter, we discussed the need for establishing an independent bankruptcy practitioners’ organization. On June 13, 2001, a preliminary meeting of practitioners from different regions was held to address these issues. A story about this meeting is on page 9.

We are planning to dedicate our next issue to the materials of our correspondents, practitioners, and arbitration managers, in which they will share with you their experience in resolving problems in applying the Law. We look forward to your comments and proposals.

Olga Makara

PR and Media Coordinator

NEWS OF LEGISLATION

More than a year and a half of experience in applying the Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt" confirms the need for improving some of its provisions. It is the need for more specific interpretation of some terms, and a clearer definition of powers, and some other aspects of the activity of arbitration managers.

Accordingly, People’s Deputy V. Zachosov introduced the draft law of amendments that should improve the mechanisms of solvency restoration and bankruptcy. This draft Law was developed with the direct participation of the legal department of the Financial Restructuring Project (FRP). Well-versed western consultants and Ukrainian lawyers tried to generalize the experience of applying of the Law "On Restoration of Solvency of the Debtor or Declaring It Bankrupt" and to eliminate the problem areas found in this Law.

On June 7, 2001, the Law of Ukraine "On Changes and Amendments to the Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt" was passed in the first reading. MPs voted in favor – 238, abstained - 115, and no one was against. It should be mentioned that other bankruptcy draft laws introduced in the VR by other proponents were rejected.

The idea of changes and amendments to the existing Law came up almost immediately after it was passed by the Verkhovna Rada in 1999. The reason for this was that some points and provisions developed by the Working Group that drafted the Law disappeared or underwent some changes during hearings in the Rada. Also, quite often, the realities of Ukrainian legal system undermined the noble intentions of the lawmakers.

As early as March of this year, this draft Law was reviewed by the Cabinet of Ministers in conjunction with the Ministries of Economy, Finance, Labor and Social Policy, Justice, the State Property Fund, the State Tax Authority, the State Committee for Industrial Policy, and the High Arbitration Court of Ukraine. After some improvements suggested by these institutions, the Cabinet of Ministers recognized that the proposed changes and amendments will indeed facilitate the more efficient functioning of solvency restoration and the bankruptcy system, and will not cause additional budget expenditures. The draft Law is designed to improve the mechanisms of all bankruptcy and solvency restoration procedures. It is also envisioned to introduce changes to some articles of the effective Law that define specifics of bankruptcy of some categories of business entities, in particular, bankruptcy of an absent debtor and debtor-led sanation. The draft law clarifies the provisions on appointment of a sanation manager and his powers, functions of a liquidator, as well as provisions on arbitration managers.

After a number of complaints, it is proposed to construe "official publication" more narrowly, and according to the draft Law these will be limited to "Holos Ukrainy" and "Uryadovy Kuryer" newspapers. This will help the uniform construction of procedural terms. The draft gives a clearer definition of moratorium, and clearer regulations that govern signing of an amicable settlement agreement. The new definitions will help in restoring the debtor’s solvency for satisfying the creditors’ claims and keeping jobs. The mechanism for finding creditors is being improved. It is proposed to separate the creditors into pre-petition competition ones (whose claims arose before initiation of proceedings, and are not secured by collateral), and post-petition current ones (whose claims arose after initiation of proceedings). Their rights and obligations are defined. In most cases, requirements for the creditors have become stricter. Thus, for the competition creditors, there is now a final bar for filing of 30 calendar days.

As to the rights and obligations of sanation manager, the new draft seeks to expand these. It is proposed that the sanation manager will file claims for the debtor’s receivables and will be entitled to reject all contracts that can cause losses to the debtor.

The purpose of this article was not to familiarize you with all changes and amendments proposed by the new draft Law. If you are interested, you can find the complete text of the Law passed by the Verkhovna Rada in the first reading on our web site. Clearly, this document needs to be further developed, both by the Rada and the working group. We hope that arbitration managers, enterprise managers, and owners that have already been through bankruptcy proceedings will actively participate in discussion of the draft Law to make it fully effective, objective and complete. Ultimately, it’s to everyone’s benefit.

OUR INTERVIEW

Interview with Mr. Rgepishevskiy, the Head of Bankruptcy Agency in Odessa, Kherson, and Mykolayiv oblasts. A serious and comprehensive account about assignments, difficulties, and achievements of Odessa Bankruptcy Agency Department and our seminars in Odessa.

Mr. Rzhepishevsky, could you please tell us, what does the Regional Bankruptcy Agency do and what are its main tasks in Odessa region?

-To a certain extent, the work we are involved is new, but on the other hand, this is a continuation of what we started to do three years ago. One of our main functions is maintaining a database of bankrupt enterprises and bankruptcy cases. This database substantially assists us in our work, for we can invite domestic and foreign investors for cooperation with insolvent enterprises, as well as track down and prevent cases of fictitious bankruptcy. The Agency oversees safekeeping of state property, prevents its looting before and after initiation of bankruptcy proceedings, as it happens quite often that before the case is open the most liquid assets are sold, and the enterprise goes for bankruptcy. Therefore, the Agency has the task of protecting state interests and being aware of the main problems in bankruptcy proceedings. Unfortunately, many enterprise managers still equate bankruptcy with liquidation; so we explain to them that bankruptcy most often means financial rehabilitation and not liquidation, and even in the event of liquidation it is not the entire enterprise that is liquidated, but only its inefficient or unprofitable part.

-This is a difficult job. We have priority enterprises in our oblast that we pay special attention to. Out of a total of more than 400 large enterprises, 100 are strategically important ones and account for over 90% of oblast budget revenues, so we use preventive measures so that such enterprises do not become insolvent. The Agency also consults enterprise managers and is involved in issues of pre-trial sanation. If proceedings are initiated anyway, we help in drafting sanation plans and other practical restructuring matters, such as searching for investors. We often need to deal with problems related to amicable settlement agreements, for as you know, it is not easy to get the debtor and the creditors to the negotiating table. They quite often have antagonistic positions, so we try to explain to the creditors that in the event of liquidation, the most they can hope to get is 10-15%, and often nothing at all. Perhaps, then, it makes sense to restore the debtor’s solvency, when the creditors will receive some of their money during the proceedings, and some – after a while. We have to explain this, and I must say we are quite successful at it. There are a number of precedents when amicable settlement agreements were signed, and the current situation substantially differs from the one when we started. Today we have Ukrainian investors when businessmen opt for manufacturing instead of trade. Ukrainian businessmen are willing to restore domestic production, these are people who made their money in Ukraine and keep it in Ukrainian banks.

You mentioned the problems in relations between the debtors and the creditors, and what about the State Tax Authority and the Pension Fund, do they have an understanding of these problems?

- There is substantial progress. Two years ago, the STA was quite skeptical about the use of the Law "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". Today we have very constructive relations both with the STA and the Pension Fund. Our contacts improved after adoption of the "Procedure for Forgiveness (Writing-off) and Deferral of Debt or Payment of Debt in Installments by STA when Signing an Amicable Settlement Agreement in Bankruptcy Proceedings," which was registered in the Ministry of Justice in December of last year. And I can say that now the STA is contacting us for consultations and advice. They are starting to initiate bankruptcy proceedings against absent debtors and seek our advice about how to speed this procedure. And if at the beginning it was not clear who arbitration managers are and what functions they perform, then now the situation is gradually changing.

Mr. Rzhepishevsky, could you be more specific about the Agency’s role in training arbitration managers? What is the market for arbitration managers in your region, what qualifications do these people have, and what percentage of licensed arbitration managers are actually working on cases?

- Arbitration managers are trained in the Southern Regional Bankruptcy Information and Training Center; however, we are also involved in this process. I should like to say that not all those who were trained in the Southern Center obtain licenses and the greater part of licensed managers were given cases by arbitration courts. I am familiar with the attitude of arbitration judges, and if initially they were giving preference to people who have some experience, lawyers and heads of law firms, and it is clear why as they wanted the cases to be given to the most qualified people, now most of our graduates work on cases. But it is still too early to assess their work. It is like when somebody goes to university, it is difficult to say what kind of a professional he or she will become. It is no guarantee that a student who finished high school with all A-levels will be a good professional. Therefore, here we have an individual approach, as any society has different strata. Likewise among arbitration managers there are very qualified and less qualified people. But we hope anyway that most of them are well educated people, with a legal or economic background, who require some experience, but at the moment not everything for them goes smoothly. As you know, the Law was passed in 2000, the first appointments [of arbitration managers to serve on cases] started at some time in March. Therefore for many arbitration managers the first stage in the proceedings ended only at the end of the year. Only after they successfully finish at least one important case and get some experience, will it be possible to speak about results. That is, now it is too early to make any general conclusions. People have to gain sufficient practical experience because theoretical knowledge does not guarantee success in practice. There are points that are not explained either in the Law or any other documents. Moreover, there are inconsistencies between the Law and the Program of Privatization, legislation on joint stock companies. And arbitration managers have to deal with the most various situations. And every enterprise, like every person, requires different approaches to its treatment.

- Most arbitration managers are well-educated people, but there are a few that want to make quick money, and this is quite disappointing. At the meeting of the Bankruptcy Practitioners Association we are planning to adopt a code of conduct for arbitration managers that will prescribe how they should behave.

You mentioned Arbitration Managers Association, I believe our readers would be interested to know about this Association that was set up in your oblast...

- It was on the initiative of arbitration managers, and we named it Bankruptcy Practitioners, not Arbitration Managers, Association as it includes other members, for instance, employees of our Agency and of the Southern Regional Bankruptcy Information and Training Center, enterprise managers, as well as people that are interested in restructuring and bankruptcy issues. In September of last year we had our founding meeting. The Association has been officially registered, and in my opinion, efficient work has started. The Association members have their monthly meetings, at 15:00 on the 15^th day of every month, if this is a day-off, then we meet on the next day. I can say that the core of the Association is always very active, we discuss extremely important issues. Arbitration managers are very busy people, and they do not have an opportunity to meet with each other during the day. At our meetings they can share experiences, discuss problems, and consult each other. The Agency is always involved in this current work of professional association, and in our turn, we try to help them by providing new professional information, distributing new regulatory documents, like orders of the Ministry of Economy, methodologies and other materials on efficient bankruptcy (e.g., the recently received draft Law "On Changes and Amendments to the Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt"). There is an on-going exchange of information that is needed both for arbitration managers and the Agency, because then we are aware of the problems that concern the practitioners, learn about proposals they have, try to systematize them, and then include them in our training courses.

A few words about the recently held seminar on financial restructuring and principles of use of the Law "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". How do you assess it?

- The seminar that was held in April of this year by the Agency in conjunction with USAID Financial Restructuring Project was a very important event, and a form of professional upgrading for our arbitration managers and staff. I always say that it is impossible to stop in development, there always should be room for self-improvement. Our Agency is trying to assist in this process. Thus, in November of last year, we held a seminar, "Practical experience in applying the Law "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". It has been half a year since, and we have this new seminar where we hear presentations of FRP experts. Any new information is useful, even bearing in mind that two days is a short time to discuss everything, but I’ve already heard some opinions of arbitration managers who said that at this seminar they learned much that was new and useful for their professional activity. This calls only for one conclusion: it makes sense to have such seminars. I know that the trainees were happy both with the agenda and the subjects covered at the seminar. Even before our joint seminar, I followed the activities of FRP with great interest. I’ve been regularly receiving their newsletters, and I believe that this Project is extremely valuable. We also highly assessed the presentations of the FRP staff and, in particular, Mr. Gleb Glinka, and our arbitration managers, I hope, learned something new. The Agency will continue having such periodical trainings, and we shall be grateful to FRP if they will be able to support and assist us in this very important work.

Mr. Rzhepishevsky, in conclusion, could you tell us about specifics of restructuring and prospects for improving bankruptcy procedures and development of your region…?

- I can say that, based on the results of last year, 2000, over 400 bankruptcy cases were initiated in Odessa oblast. Whereas under the old Law in 1998 and 1999 there were approved only 2 sanation plans (there were no amicable settlement agreements), then in 2000 alone there were signed 6 amicable settlement agreements, and Odessa Oblast Arbitration Court approved 6 sanation plans. In terms of figures, only in one year over UAH 4 ml of debt was repaid, about UAH 1 ml of salaries were paid in cash, and the total value of restructuring was UAH 42 ml. All this confirms the existing, noticeable progress, and I believe that with improvements to the new Law, especially if it will be viewed as a powerful market mechanism that can have impact on macroeconomics, the prospects for development of restructuring processes are quite clear. Inefficient enterprises cannot stay as they are; they should go through bankruptcy procedures. And those that can operate should be restructured and their solvency should be restored, and those that cannot, should be liquidated. There should not be parasites on the body of the Ukrainian economy.

OUR SEMINARS

Together with the Ukrainian Banks’ Association the Project for the first time organized a seminar for legal staff of banks. The seminar was held at the Training Center of the National Bank of Ukraine and addressed the issues that arise for the banks’ clients during application of bankruptcy and solvency restoration procedures.

Ukrainian banks were not unaffected by the problems of restructuring and bankruptcy of Ukrainian enterprises. In most cases the banks are the creditors of Ukrainian enterprises. If an enterprise becomes insolvent, bankruptcy proceedings are started, and this means that the bank has to recover its money using the Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". In some cases, the banks themselves may initiate bankruptcy proceedings.

The invited experts, Mrs. V. Danishevska, Commercial Law Center Director, and Mr. A. Zhukov, Head of the Lawyers Board of Ukrainian Banks Association and Deputy Chairman of the Board of Bank Mriya, spoke at the seminar.

Mrs. V. Danishevska, an ex-judge of Zaporizhzhya Oblast Arbitration Court, shared her experience of handling bankruptcy cases. As we know, it is the arbitration judges who have the most complete information on use of bankruptcy legislation. Their professionalism and profound knowledge of both the old and the new legislation impressed the audience. Mrs. V. Danishevska gave a detailed account of problems of the Law and illustrated her story with real court cases.

Anatoliy Zhukov addressed the practical issues of application of the Law "On restoration of Solvency of the Debtor or Declaring It Bankrupt". Mr. Zhukov made a comparative analysis of Russian, U.S., and Ukrainian legislation. He also reviewed changes and amendments to the law that were passed by the Verkhovna Rada in the first reading. It is worth noting that Mr. Zhukov was a member of the working group that drafted this Law. In spite of this, in his analysis he pointed to a number of negative and debatable points in the current Law. In particular, the problem of a final bar-date for filing creditors’ claims, distribution of salary claims, and the treatment of secured claims. Much attention was paid to the problem of accounting losses, and interest on credit debt in payments to the creditors. Amicable settlement agreements were viewed as incomplete solvency restoration.

A lot of questions to the speakers proved that the subject of the seminar was very important to the bankers. Most of the questions were connected with specific real cases where banks acted as creditors.

FRP staff also made their presentations at the seminar. The bankers received information on liquidation and amicable settlement agreements with creditors, successful restructuring cases of insolvent enterprises, and the Corporate Restructuring Model.

Business contacts were established during the seminar that will help in establishing links between banks’ clients, the banks, and FRP, in achieving our common goal of restoring solvency in Ukraine.

Lessons Learned in the Process of Applying the New Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt"

The "Lessons Learned" conference was held by Deloitte Touche Tohmatsu Financial Restructuring Project on June 12-14, at the Project’s Dnipropetrovsk Training Center. The purpose of the conference was to share the experience acquired in the Dnipropetrovsk, Ivano-Frankivsk, Kharkiv, and Donetsk regions, in the process of applying the current Law of Ukraine "On Restoration of Solvency of the Debtor or Declaring It Bankrupt". The conference had two parts. The first two days reviewed the most pressing problems of enterprise restructuring in Ukraine. The third day of the conference was devoted for enterprise managers from Dnipropetrovsk region, as well as the State Property Fund of Ukraine, the Pension Fund, and the State Tax Authority representatives. About 60 enterprise managers participated. On-site consultations on the opportunities provided by the Law for taking enterprises out of crisis, were provided to 12 enterprise managers.

The conference emphasized the importance of day-to-day analysis of barriers that arise on the way toward applying the new Law by enterprises. The participants mentioned the need for dissemination of information on opportunities provided by the Law. This should be done through conferences, bulletins, and Internet sites. It was also remarked that government agencies should play a more active role in enterprise restructuring.

In the course of the conference, arbitration managers from a number of Ukrainian regions discussed the need for creating the National Association of Restructuring and Solvency Restoration Practitioners. This discussion resulted in a Memorandum on the creation of a National Association of Practitioners and on its goals, tasks and objectives. This organization would be able to receive and disseminate timely information, propose amendments to the Law, lobby and protect the common interests of practitioners, etc.

Creation of the National Association is also useful for enterprises, since it will assist them in handling problems connected with the threat of bankruptcy. Such an association, in contact with similar organizations from developed countries, will make it possible to take advantage of the international experience in this area.

The conference highlighted the general problems in applying the Law, prospects for its improvement, and specific features of some of its provisions. Judges Nina Kamsha and Natalia Tereshchenko, judges of the Dnipropetrovsk Arbitration Court, shared their opinions on procedural aspects of the Law and analyzed typical situations in bankruptcy cases.

Representatives of the Department of Economy of the Oblast State Administration, the local STA and the Pension Fund provided answers and comments in response to the questions of the participants. Practitioners from different regions of Ukraine shared their experience of successfully restructuring specific enterprises.

It was emphasized that FRP’s operation in the aforementioned regions enabled the formation of a large group of qualified practitioners who can carry out enterprise diagnostics, develop sanation plans, and provide consulting assistance in bankruptcy proceedings.

The conference participants recognized the practical implications of this meeting both for arbitration managers and representatives of the executive and judiciary.

Every step in generalizing the accumulated experience in applying the new Law provides more opportunities to accelerate legal reform and take Ukrainian enterprises out of crisis.

NEWS

On June 13, 2001, a preliminary meeting of bankruptcy practitioners from the regions of Ukraine was held in Dnipropetrovsk. The meeting was chaired by a well-known restructuring practitioner, arbitration manager, and Director of Kriviy Rig Crisis Management Center, Mr. Pavel Mikhailidi. He characterized some problem issues of crisis management in Ukraine and explained the need for creating a non-governmental organization of bankruptcy practitioners.

FRP lawyer Andrei Volkov assisted in defining the main tasks of this organization. In his opinion, this association should act in the interests of crisis managers and assist in solving global issues at all levels. It should be a national organization that may have the following main tasks:

• Represent and protect the interests of bankruptcy practitioners;
• Resolve the issue of remuneration of arbitration managers;
• Define the procedure of appointment of arbitration manager, taking into account interests and recommendations of the entity where he or she will serve as such;
• Arbitration managers should be trained and examined only by leading experts of this sector (Ministry of Economy can only license arbitration managers);
• There is a need for support of economists, analysts, and other bankruptcy practitioners;
• Training abroad;
• Creation of unified database;
• Receiving grants, etc.

A great number of practitioners participated in discussing the status and interests of the organization. All speakers pointed to the problems faced by arbitration managers in all regions of Ukraine, they spoke about the need for a non-governmental organization that should include not only arbitration managers, but also leading bankruptcy practitioners, scholars, and all interested professionals, and should be free from government interference. It was proposed to start creating the organization in the localities. The powers of the organization’s regional representatives were also discussed.

A lively discussion was provoked by the issue of the status of the organization, i.e., whether it will be a non-governmental or professional one, and whether legal entities can be members of it.

Joint constructive decisions were made as the result of a lengthy discussion. It was decided that it is necessary to create a non-governmental organization of bankruptcy practitioners that will include professional arbitration managers, lawyers, financial analysts, appraisers, and other enterprise restructuring and solvency restoration practitioners, as well as allied practitioners. In addition, participants of the meeting were included in the initiative group for creation of the organization. The initiative group tentatively suggested "Association of Crisis Managers of Ukraine" to be used as a working name of the organization. Other names are to be considered, and to be voted on in the near future.

Because of the urgency of the defined tasks, it is planned to hold the National Bankruptcy Practitioners Congress as early as in September, and the Founding Congress of the organization – in the second half of September. A working group was created for the purpose of preparing for the Founding Congress and drafting the necessary documents. This group includes:

FRP fully supports the idea of creating such independent organization. We believe that this organization will assist in satisfying the interests of its members, bankruptcy practitioners, solving the global problems of creating civil society, implementation of the idea of rule of law, and restructuring of Ukrainian economy.

You can send your comments and proposals to our address and to another web-site, directly to Mr. Mihailidi: http://www.bankrut.com.ua.

NEW CENTER

As this article was written by Mr. Sergei Oskin, Director of our Sevastopol Training Center, we publish it in Russian, for our new readers in the Crimea represent a mostly Russian-speaking community.

Sergei Oskin, Director, FRP Sevastopol Training Center

In May 2001 it was resolved to expand FRP’s operation into the Southern Region. Sevastopol was selected as a site for its Training Center. Sevastopol region has numerous enterprises, many of which are, unfortunately, insolvent. These include town-forming and military-conversion enterprises. The city authorities began to pay special attention to the problem of their sanation, restructuring, or reorganization, which is supported by the Program of Social and Economic Development of Sevastopol in 2001. Currently, some positive trends can be observed in the city’s economy, but it requires new impetus for its successful development.

Launch of FRP’s operation in Sevastopol in such a situation can be viewed as timely and necessary assistance in solving regional economic problems.

General purpose of FRP Sevastopol Training Center (hereinafter, the Center): to improve professional training of independent solvency restoration practitioners through organization of seminars and trainings, as well as direct involvement in the issues of financial restructuring of the region’s enterprises and practical assistance in solvency restoration.

Additionally, it is planned to identify several local enterprises for solvency restoration pilot projects under the developed program. Eventually, at the last stage, it is necessary to mobilize the necessary resources and create legal and economic conditions for transforming the Center into a self-sustainable organization.

In practical terms, I see the Center’s mission in providing methodological and substantive support to independent solvency restoration practitioners, as well as managers of crisis enterprises. On the other hand, the Center should play its role in the development of the process of financial rehabilitation, sanation, restructuring and reorganization of enterprises in Sevastopol region.

The Center will also be involved in bankruptcy prevention of socially important and town-forming enterprises. Currently, most such enterprises in Sevastopol region are in the state of depression, some of the banks should go through financial rehabilitation, the number of bankruptcy cases is growing rapidly, and the majority of cases are initiated by the executive authorities.

The social situation at these critical enterprises is difficult. The existing administrative bankruptcy agencies are mostly involved with state-owned enterprises, which leaves small and medium businesses (about 200 thousand) out of scope of their interest. Therefore, creation of bankruptcy and crisis-management centers that would provide their services to all types of businesses remains a very high priority.

The Center is interested in cooperation in the following areas:

• Enterprise bankruptcy prevention;
• Development of crisis management technologies;
• Training of arbitration managers;
• Training of crisis managers;
• Setting up commercial [self-sustainable] regional bankruptcy and crisis-management centers
• Crisis management

The issues of financial rehabilitation, sanation, restructuring and reorganization of enterprises, crisis management, and the efficient use of bankruptcy legislation are the most important elements of Ukraine’s economic strategy during transitory period. This is the way to go.

International experience in this area is considerable; there are many interesting economic schemes and solutions. It is very important to study and apply this experience.

Sevastopol has been given an opportunity. This is a chance to be used! We invite managers of crisis enterprises to participate in our first seminar on application of the Law of Ukraine "On restoration of Solvency of the Debtor or Declaring It Bankrupt" that will be held on July 20, 2001.