On September 9, 2003 an announcement in the official newspaper Golos Ukrainy said that the Commercial court of Odessa region had initiated bankruptcy proceedings of state shipping company Black Sea Maritime Shipping Company (Blasco).

Bankruptcy procedure in Ukraine is regulated by the Ukrainian Act of May 14, 1992, revised in June 31, 1999 which deals with restoring debtors to solvency or declaring them bankrupt.

If a debtor is not able to satisfy the creditor's demands, for a sum that exceeds 300 minimum salaries (approximately USD 10412), then, the creditor or debtor is entitled to apply to the Commercial court (formerly the Arbitration court).

In the first instance the bankruptcy application of the creditor or debtor should be passed to the Commercial court.

The bankruptcy application of the creditor shall include the following:

• the amount of the creditor's claim against the debtor, including the amount of fines and penalties to be paid;
• a description of the circumstances confirming the debtor's obligation to the creditor;
• proof of the fact that the amount of confirmed claims exceeds 300 minimum salaries;
• proof of the fact that the creditor's claims are well justified.

After the judge receives the bankruptcy application of the creditor or debtor he (she) must accept the bankruptcy application or reject it in not more than five days. The details of acceptance or rejection should be stated in the ruling.

This ruling marks beginning of the procedure of administration of the debtor's property with appointment of trustee and setting of the date of the preliminary court session. This should take place within 30 days of the date of the bankruptcy petition acceptance and the declaration of a moratorium meeting creditors' claims.

During the preliminary court session the judge obliges the applicant to place a notice of the initiation of a bankruptcy case in official newspapers within 10 days.

According to article 12 of the Act on the request of the parties or of its own initiative the Commercial court is entitled to take measures to secure satisfaction of creditors' claims including the arrest of the debtor's property and prohibition of certain transactions.

Article 14 of the Act envisages creditors presenting their written applications to the court including claims and documents of proof one month from the date of publication of the announcement of the initiation of bankruptcy proceedings in the official publication.

The parties to the bankruptcy proceedings as well as participants, should be notified of the preliminary court hearing.

Within 10 days of the date of the ruling of the preliminary court hearing, the trustee must notify the creditors according to the creditor's claims list on the time and venue of the creditor's meeting, and organize the meeting. The creditor's committee is to elected at the creditor's meeting.

The creditor's committee may request the court to make a decision to start the sanative procedure. In this case the sanation manager is obliged to satisfy the creditor's demands. The sale of the debtor's property is one of the ways of doing this. The sanative procedure should be performed within twelve months. This term may be prolonged or reduced to a period of six month. Managing the debtor's property during the sanative procedure is entrusted to the sanation manager.

If the debtor is recognized by the commercial court as a bankrupt the liquidation procedure will begin. The term of liquidation is twelve months and it can be prolonged for six month.

According to article 23 of the Act, the powers of the debtor's management to administer and manage the debtor's assets are suspended as of the date of the commercial court's ruling to declare the debtor bankrupt. The debtor's powers of property ownership are terminated. The liquidator must place an announcement in official newspapers about the declaration of the debtor as a bankrupt and initiation of the liquidation procedure within 5 days of the date of the commercial court ruling.

Any debtor's property (assets), which was identified by a creditor or trustee in bankruptcy is to included in the list of property to be to liquidated and shall be divided in proportion to creditor's demands.

Creditor's demands may be satisfied by the financial resources of the debtor as well as material and other assets, copyright and allied rights, corporate rights, property rights, etc.

The role of bankruptcy manager, such as: trustee in bankruptcy, sanation manager, liquidator is very important in the bankruptcy proceedings.

The new law creates conditions by which the bankruptcy procedure can be carried out leading to the revival and not the liquidation of the enterprise by operational restructuring and legal technique to deal both with debtors and creditors. Application of such procedure will allow at least:

• To fix the amount of existing debt and thus stop them escalating.
• To allow the possibility for debtor-lead restructuring procedure.
• To change management or owners (if necessary).
• To put plans in place to pay off debts according to Ukrainian law and structure installments over at least five years (including tax debts), with possible variants to write off a part of them.
• To use specially designed computer software to create future performance and cash flow scenarios.
• To make possible future debt payments through ongoing business activity without additional financial injections from owner's part.
• To allow the enterprise to emerge from the financial crisis with minimum expenses and losses.
• To elaborate and effectively implement a restructuring plan.

So, bankruptcy procedure application is an efficient instrument for enterprise debt solving and tool for effective implementation of any restructuring projects.