Bankruptcy procedures : supervision.

Once the arbitrazhny court accepts a bankruptcy petition, it convenes a hearing to review the claims against the debtor. As a result the court may appoint a temporary manager" who is responsible for reviewing the debtor's financial position, drawing up a claims register, calling the meeting of creditors, and ensuring that the debtor's assets are preserved. At this stage, the regular governing bodies of the company retain their authorities, albeit with several important restrictions.

While under supervision, a legal entity cannot reorganise the company or participate in other legal entities and associations of legal persons, enter into joint venture agreements, establish branches or representatives offices, place bonds and other securities, or pay dividends.

Any transactions involving a debtor's property valued at more than 5 per cent of the book asset value (as well as any loans, guarantees, assignments, and trust management agreements) require written approval from the temporary manager. The latter retains his powers until the court decides to move on to the next bankruptcy procedure.

Supervision must be completed within seven months by a court decision that can commence financial rehabilitation or external management procedures, or declare the debtor bankrupt and start receivership, or approve the settlement.