On October 2, the Cabinet of Ministers passed the directive which will enable sales of property of bankrupt entities through ProZorro.Sale.
We welcome this decision, since we have been insisting for a long time that ProZorro.Sale are based on the principles of transparency, public accessibility, non-discrimination and equal access to information to everyone.
This means that there is a chance to make the sales of bankrupt entities’ property can become as open and transparent as possible. Thus, the risk of violations drops.
What was it like before?
Until now, Ukraine had no effective mechanism for sales of such property. This harmed both potential buyers and creditors. During the years of the lengthy procedure, a creditor could recover less than 10% of investments into the company that went bankrupt. The mechanism of sales itself was complicated and opaque, which definitely scares off a potential buyer.
The new Code on Bankruptcy Procedures says that the property of bankrupt entities must be sold through an electronic trade system. Before, this property was sold for ridiculously low prices, and the procedure could last for several years. The new Code not only changes the sales procedure, but also defines the main principles under which this sale should take place.
“This is a cool, right idea. A good story about how to sell assets as part of the bankruptcy procedure through the transparent, honest internet platform ProZorro.Sale, which is highly trusted,” said Prime Minister Oleksii Honcharuk.
The Parliament should introduce mandatory e-auctions and the functionality of the ProZorro.Sale system for lease of municipal property. To do it, the new version of the law “On Lease of National and Municipal Property” No. 1055-1 should be passed. It has already been supported by the Committee on Economic Development before the second reading.
It is also necessary to use the e-auction approach when land lots are sold. To do this, it is necessary to make amendments to the Land Code of Ukraine and to introduce the mechanism of electronic auctions application in this sphere.
Find out what was threatening the bankruptcy reform before this directive in Khrystyna Zelinska’s blog.
Transparency International Ukraine (TI Ukraine) is an accredited chapter of the global movement Transparency International, taking a comprehensive approach to the development and implementation of reforms to reduce corruption. TI Ukraine has administered and provided the government such electronic systems as ProZorro, ProZorro.Sale, eHealth, and E-Data. Our other ongoing projects include the Transparent Cities Ranking and development of the DOZORRO community for control over public procurement.
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