The Yabloko faction will not support the Government's draft law "On Insolvency (Bankruptcy)" which will be considered by the State Duma at first reading on March 6, 2002.

The Yabloko faction thinks that this law will only aggravate the situation in this sphere.

The present law "On Bankruptcy" represents an efficient instrument for the redistribution of property in the interests of business structures linked with corrupt bureaucrats; it undermines the investment base of Russia's economy. Application of this law resulted in an abrupt increase in the number of bankruptcies, use of the period of litigation to remove company assets and instigate the insolvency of competitive companies with the help procedures conceived for opposing actions.

All the drawbacks of the present law are retained in the draft law submitted to the Duma. It still demonstrates the obvious fault: creditor interests dominate in the law. The creditor may suspend an owner and destroy the enterprise, if the owner fails within three months to return a loan of over 1,000 minimum wages (cf., 500 minimum wages in the present law). (Ed. ***At present the minimum wage amounts to 150??? roubles). The owner will not receive any notification on the measures undertaken after suspension by the provisional administrator and may not lodge a complaint against its actions in court.

The past few years have demonstrated the redundancy and even harmful nature of the Federal Financial Recovery Agency. It should be noted that the government's draft of the law prepared by this agency extends the proxies of the Federal Financial Recovery Agency.

The Yabloko faction believes that the Federal Financial Recovery Agency should be abolished.

The role of the state here should be minimised to the establishment of general regulations to resolve debt disputes. The debt disputes should be resolved in court. The total debt that may serve as a basis for initiating bankruptcy proceedings should amount to at least 10,000 minimum wages. The owner should have the right to access all financial and economic activities in order to be able to contest the actions of the provisional administrator in court.

It is also necessary to stop using bankruptcy as an instrument of state policies and substitute for fiscal policies. The so-called "political priorities of the state in bankruptcy proceedings" are complete fiction. It is necessary to return bankruptcy to the domain of civil-legal relations and minimise the state's administrative intervention. The Arbitrary-Procedural Code of the RF should contain all the procedural norms.

The Yabloko faction has prepared over thirty amendments to the present law. The faction has also declared readiness to submit its own draft law on bankruptcy to the Duma during the spring session.