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The Legal Aspects of Developers' Bankruptcy

Student: Palagina Diana

Supervisor: Elena Lukyanchikova

Faculty: School of Law

Educational Programme: Jurisprudence (Bachelor)

Final Grade: 8

Year of Graduation: 2020

The graduation qualification work «The Legal Aspects of Developers' Bankruptcy» consists of introduction, two chapters divided into paragraphs, conclusion and list of sources. The value of the typescript text is 82 pages (11 of them relate to the list of sources), without attachments and graphic elements. Key words: developers’ bankruptcy, participant of construction, requirement for transfer of a living room, construction object, deposit creditors. The author analyses the legal institute of developer’s bankruptcy, the following themes are investigated: the legal status and procedural position of participants of the bankruptcy case, as well as the procedure of satisfaction of declared requirements of participants of construction and deposit creditors. As a theoretical basis of the work was used predominantly articles and dissertations, the accent was made at the relevant arbitrage practice. The main aim of the research work is the elaboration of recommendations in order to eliminate legislative gaps and collisions which arise during the enforcement of law. The author consistently examines legislative innovations for compliance with the basic goal of the special legal norms about developers’ bankruptcy – the protection of individuals’ rights as non-professional investors. The most significant and requiring the operational solution problems are highlighted, among which are: 1) the excessively narrow definition of the construction object – as a result, such objects as building with exclusively apartments (suites) or blocked houses with only two blocks are excluded from the action of special rules; 2) the concept mismatch between the definition of «living room» contained in the Bankruptcy Act and Housing Code – whereupon a participant of construction is not able to declare the requirement for transfer of a living room with reference to cottage as part of project development; 3) the groundless constriction of the definition of non-residential room by a reference to the ultimate area (7 m2) – this entails the violation of the principle of equality; 4) the incompleteness of legal norms regulated the procedure of the replacement of the developer by cession of rights and property to the building society or to the new developer. The author suggests recommendations for the elimination of legislative gaps and collisions in the current edition of the paragraph devoted to developers’ bankruptcy in order to comply two fundamental principles – the principle of the equity and the principle of the proportional satisfaction of creditors’ requirements. The most significant among them are: 1) to unify the following definitions: «developer», «construction object», «living room»; to review the definition of non-residential room; 2) to correct the formulation of the article devoted to the cession of rights and property from the developer to the building society; 3) to foresee state support measures for all individuals without reference to the contract concluded with the insolvent. After the conducted research, the author concludes that the legislator ought to pay attention not only at potential risks, but to solve actual problems linked with the developers’ bankruptcy operatively.

Full text (added April 30, 2020)

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