Belarus launches new mechanism of financial recovery of struggling farming enterprises
Belarus President Aleksandr Lukashenko signed Decree No. 399 on the financial recovery of struggling farming enterprises on 2 October.
The document sets out a number of basic tools and mechanisms to help insolvent enterprises get back into the black.
The document forbids judicial bankruptcy proceedings against insolvent agricultural enterprises and cancels the ongoing insolvency (bankruptcy) procedures in respect of such enterprises. The chairmen of the district executive committees shall be in charge of pre-trial financial rehabilitation of insolvent enterprises.
According to the Decree, employees (except for the head, their deputies and chief accountant) shall retain employment in an agricultural enterprise that is leased out or transferred into asset management on the terms laid down in the employment contracts.
The document provides for an increase in the authorized capital equal to the amount of the debt and transfer of shares (stock in the authorized capital) into the ownership of a creditor; conclusion of a settlement agreement with creditors to change the debt payment terms; deferment on the obligations not covered under a settlement agreement for 3 years and in installments (five years). The interest rate on loans can be reduced to 1.5% per annum.
The Decree contains the norms regarding the issue of bonds by oblast and district administrations to transfer the debt toward the local authorities or the Agency for Asset Management upon an instruction of the head of state. The document also regulates the transfer of shares from the participants of the economic entity into the ownership of the creditor, full or partial exemption from liabilities.
All farms that undergo an economic insolvency (bankruptcy) procedure or fall under the established procedure shall be entitled to use crisis management tools. They include the transfer of the debt into additional-issue shares, and also the contributions by participants and third parties to the authorized capital of the farm.
The document also allows renting out the assets of the enterprise without state registration and real estate documents; providing buyers of permanent structures with land plots on which these structures are located; transferring shares (shares in the authorized capital) into the ownership of the manager to the amount of not more than 25% plus one share (the stake should not exceed 25.01% of the authorized capital) of the farm once the business plan is implemented, with an approval of the head of state.
The above-mentioned mechanisms and tools are aimed at introducing advanced management methods to secure efficient performance of farms.