Challenging the debtor’s transactions is an integral part of bankruptcy proceedings and is regulated by the Bankruptcy Law. This is a key tool for protecting the property interests of all creditors and forming the bankruptcy estate. However, not every person has the right to initiate the procedure for declaring transactions invalid within the scope of the bankruptcy case. The legal status of the claimant is strictly regulated.
1. Arbitration Manager (or Bankruptcy Trustee): the main initiator
The main entity possessing the authority to challenge transactions is the arbitration manager (interim, administrative, external, or bankruptcy trustee).
Powers: the manager is obliged to conduct an analysis of the debtor’s financial and economic activities and identify transactions concluded during the suspicion period.
Initiation: the manager, acting on behalf of the debtor, files a statement with the arbitration court to declare the transaction invalid.
2. Bankruptcy Creditors: the right to substitution and protection
Bankruptcy creditors also have the right to challenge transactions, albeit under certain conditions.
Independent Challenge: creditors have the right to file a statement to declare a transaction invalid if they constitute more than ten percent of the total volume of claims included in the register, and if the manager has refused to challenge it.
Motivation: independently challenging transactions is a direct way to increase the bankruptcy estate and, consequently, raise the percentage of satisfied claims.
3. Other persons entitled to initiate the dispute
The Law stipulates that other participants in the process may also initiate a challenge if their direct property interests are affected:
Founders/Participants of the debtor: may challenge transactions if they affect their corporate rights, although their role is secondary.
Special representatives: for example, a representative of the debtor’s employees.
Mechanism of a separate dispute
The application for challenging a transaction is considered a separate (distinct) dispute within the framework of the main case. Separate disputes in bankruptcy cases require the claimant not only to have the formal right but also to provide a convincing evidentiary base confirming the bad faith of the transaction.
Knowledge of the legal status and deadlines for initiating the challenge is critically important. Effective protection of the interests of the creditor or the debtor in this process requires specialized legal support. Review the services of an attorney specializing in Separate disputes in bankruptcy cases.