Bankruptcy institution needed in Azerbaijan

There is a need to reform the bankruptcy procedure in Azerbaijan’s judicial system, Chairman of the Management Board of VTB Bank Azerbaijan Yevgeniy Kirin said to journalists, Trend reports .

In his words, although the “Law on Bankruptcy” has been adopted in Azerbaijan, in practice it doesn’t work and there are not court cases on this issue. The chairman noted that more concerned about legal entities. Along with companies that, due to actual financial difficulties, declare themselves bankrupt, there are companies that do it fictitiously, he added. The purpose of declaring bankruptcy of the latter, as a rule, is to avoid taxes, pay off only 5-10 percent of the debt, and remove the company’s assets, he said.

For these reasons, there is an urgent need for the existence of a bankruptcy institution in Azerbaijan to identify fraud cases, because at the moment there aren’t enough tools to challenge such transactions that lead to deliberate bankruptcy, he added.

Therefore, the chairman believes that creditors and other parties are interested in the legal assessment of a fictitious bankruptcy process, as well as in the integrity of managers and shareholders of the company. But unfortunately, within the framework of the legislation, banks don’t have enough opportunities to address such issues, he noted.

Creating a bankruptcy institution would have a significant impact on the business and investment climate in Azerbaijan, he said. The chairman proposed to use the experience of foreign developed countries, where bankruptcy law mechanisms work effectively.

In addition, the chairman considers it necessary to divide the law into two parts – “On the bankruptcy of legal entities” and “On the bankruptcy of individuals”. As part of this issue, the VTB Group is ready to share its experience gained in Russia, he said.