Doing Business in Russia. Котова К.П - 31 стр.

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      The decree stipulates the sale of enterprises with their entire “property
holdings.” Sales will be effected at commercial competitions on the condition
that buyers not only acquire the enterprises themselves, but also take
responsibility for unpaid debts. This obligation on the new owner will make it
possible, we hope, to change the entire situation regarding nonpayment of debts.
Although it can hardly be expected that such buyers will be found soon, they are
bound to appear once the sale of entire properties is proposed. The formalization
of ownership rights is important not only for the foreign investor on whom we
traditionally pin our hopes but also for the Russian one. At the same time the de-
cree resolves the issue of who is the master of an enterprise, the state, as owner,
or the manager. From the moment that an enterprise is declared insolvent, labor
relations with its manager will be severed. The Federal Department for Bank-
ruptcy will appoint a new manager who will run the enterprise until the moment
of its sale. Thus, as a result of this decree, these enterprises will be provided
with an opportunity to save themselves by means of sale. It is also proposed to
sell blocks of shares in state property also on the condition that investments will
be made.
      The adoption of this decree will evidently stem the tide of bankruptcies,
since the criterion for insolvency is very vague. Although an enterprise may not
have money today, in a week’s time its manager might have forgotten about its
possible collapse. What, in your view, will be the scale of involvement in the
bankruptcy process?
      There will not be large number of bankruptcy. In enterprises are on the
verge, we will take the necessary measures. The sale of an enterprise under spe-
cial conditions is one possible measure to prevent bankruptcy. The adoption of
the recent decision by the government enables us to take another step forward,
for we have established a criteria, an algorithm of decision-making for measures
of state support or for the liquidation of bankrupt enterprises. For instance, we
know that at present over a thousand major enterprises fall under the criterion of