Venedikt V.Vasilyev (c) Saint-Petersburg 2004

Powers of Attorney granted by the arbitration manager


Working activity of an arbitration manager supposes certain situations when there is a need for a representative. 
Is an arbitration manager authorized to grant Powers of Attorney and, if so, is this Power of Attorney limited by the range of its action?
An arbitration manager (temporary, administrative, outside and bankruptcy commissioner) is a citizen of the Russian Federation, appointed by the Arbitration Court to conduct bankruptcy proceedings and to exercise other powers approved by the Federal Law “On Insolvency (Bankruptcy)”, and who is a member of a self-regulating organization (Art.2 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
Depending on the stage of the procedure (from supervision to bankruptcy proceedings), an arbitration manager exercises different powers, including those connected with the limitation of power of the management body of the debtor organization. 
It this respect, it is interesting to observe the correlation of powers exercised by the arbitration manager and the debtor executive at different stages of bankruptcy procedure.
Supervision:
The debtor executive or other management body continues to exercise their powers, making some transactions with the written consent of the temporary arbitration manager (Art.82 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
The temporary arbitration manager possesses certain powers mostly concerning collection of information (Art.65 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
Financial recovery:
The debtor executive or other management body continues to exercise their powers, with certain limitations (Art.82 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
The administrative arbitration manager possesses certain powers mostly concerning collection of information, control for the activity of the debtor organization and its management body, and coordination of terms of transactions (Art.83 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
Outside management:
As from the date of introduction of outside management, powers of the debtor executive cease to exist, and the management of the debtor’s affairs goes to the outside arbitration manager (paragraph 1, Art.94 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
Bankruptcy proceedings:
As from the date of appointment of the bankruptcy commissioner, he exercises powers of the debtor executive or other management body (paragraph 1, Art.129 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ).
The executive of a limited liability company possesses several powers, including the following (Art.40 of the Federal Law “On Limited Liability Companies” of February 8, 1998, ¹14 – ÔÇ):
- without a Power of Attorney has the right to act on behalf of the company, as well as to represent its interests and to make transactions;
- has the right to grant Powers of Attorney with the right of representation on behalf of the company, as well as Powers of Attorney and substitution.
The executive of a stock company manages the company’s operations, without a Power of Attorney acts on behalf of the company, as well as represents its interests, makes transactions on behalf of the company, appoints the staff, issues orders and instructions, subject to compulsory implementation by all company workers. Other powers are stipulated in the employment agreement, as well as in the decisions of the General Meeting of Stockholders or the Board of Directors (Art.69 of the Federal Law “On Limited Liability Companies” of February 8, 1998, ¹14 – ÔÇ). Thus, the right of the company executive to grant Powers of Attorney shall be supplementary provided for. 
Taking into account the aforesaid, one should make a conclusion that at the stages of outside management and bankruptcy proceedings the arbitration manager possesses two categories of powers:
- Specific powers of an arbitration manager (for instance, maintenance of the register, carrying-out of a financial analysis, etc.), thereby acting as an independent party in his own right:
- General powers of the debtor executive, thereby representing the company and acting on its behalf.
Due to the fact that an arbitration manager can be a person with certain features (Arts.2,23 of the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002, no.127-ÔÇ), Regulations of the RF Government of September 19, 2003, ¹586, of May 28, 2003, ¹308 etc.), the attorney cannot be empowered to exercise specific powers of an arbitration manager on his behalf.
However, a third person acting in accordance with the Power of Attorney granted by the arbitration manager, acting as the debtor executive, has the right to make actions on the execution of the debtor’s rights. 
During the arbitration procedure the attorney can act on the debtor’s behalf in accordance with the Power of Attorney granted by the arbitration manager, for instance, in claims to hold transactions invalid, i.e. outside the limits of the bankruptcy case and arbitration proceedings on the bankruptcy case. In this case Chapter 6 of the Arbitration Procedure Code of the RF shall regulate relations of representatives.
Representation within the limits of the bankruptcy case or arbitration procedure on the bankruptcy case shall be regulated by Art.36 of the Federal Law “On Insolvency (Bankruptcy)”. In this case, the attorney represents only individuals and organizations participating in the bankruptcy case or the arbitration procedure on the bankruptcy case.
The arbitration manager is an individual participating in the bankruptcy case (but not in the arbitration procedure on the bankruptcy case), the right to represent his interests separately is not stipulated (Arts. 34,35,36 of the Federal Law “On Insolvency (Bankruptcy)”).
Thus, within the limits of the bankruptcy case or the arbitration procedure on the bankruptcy case, at the stages of outside management or bankruptcy proceedings a third person acts as an attorney in accordance with the Power of Attorney granted by the arbitration manager, but only as the debtor’s representative, not as the arbitration manager.