Problems of Pledge in Bankruptcy Law

Currently, the economy is developing through secured loans or asset-based finance. When strong collateral is provided, cheap loans can be issued and it will be more profitable for a company to receive additional financing for its development. The most popular traditional means of securing performance of obligations is pledge. «Quazi-security» serves as an antipode to pledge and it is represented by the following contractual structures: sale and purchase agreement, financial lease, and others. These «quasi-security» instruments are aimed at crediting the debtor, while the security function is performed by the right of ownership of the property. Bankruptcy is the most essential test for securing the performance of obligations, since this procedure identifies the most acute political and legal problems, for example satisfaction of involuntary creditors. This study intends to cast the light on political and legal problems of the institutions of pledge and «quasi-security» as well as to highlight the need for legislative amendments to the existing institution of pledge with either eliminating «quasi-security» or developing the mechanism of «quasi-security» together with pledge with certain changes in favor of civil turnover (for instance, introducing a mandatory monetary quota for involuntary creditors).