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General repossession order - foreclosure process

Saturday, 29 November 2014 12:09
General repossession order - foreclosure process

Repossession of the Customer’s property (assets)

Repossession of the Customer’s property means its seizure (inventory), confiscation and forced sale.

In virtue of writs of execution, first seized the Customer’s funds in UAH and USD, other values, including funds on accounts and deposits of the Customer in banking entities and other credit entities, accounts of securities, depositories of securities.

If data are available on funds and other values of the Customer, which are on accounts and deposits and in depository of the bank or other credit entities, all these funds are seized.

If the debtor doesn’t have funds and values enough to satisfy the Bank’s demand, other property of the Customer is foreclosure.

Property of the Customer is foreclosure in amount necessary in virtue of a writ of execution, including expenses for fulfillment it and execution fees collection.

Repossession of collateralized property

Repossession of collateralized property in enforcement order is admitted under writs of execution to be complied with the Bank’s demands as the Collateral holder/Mortgage holder.

This procedure consists of seizure, assessment and sale of collateralized property and also of providing obtained funds to repay the Customer’s debt.

In virtue of the resolution on starting of court enforcement action or resolution on seizure of the debtor’s property and imposing of prohibition on its repossession, the state executor can seizure within the framework of collection amount under writs of execution including expenses relating to executive actions.

If necessary, the resolution in virtue of which the Customer’ property is seized and its alienation is restrained, is sent by the state executor to the notarial body and other bodies which register property or keep register of restraint on its alienation.

On inventory of the debtor’s property and its seizure, the state executor prepares an act on inventory and seizure of the debtor’s property.  

While inventory and seizure of the debtor’s property, the state executor has a right to declare restraint on its utilization, and if necessary – to restrict rights on utilization of property or confiscate it from the Customer and transfer it to be kept by other persons. All issues are indicated in an inventory and seizure act. All types, volume and term of restriction are established by the state executor in each separate case taking into account the property peculiarities, its value for the owner, necessity of utilization, etc.    Violation of the state executor’s restraint to utilize or dispose the seized property results in responsibility of property keeper, stipulated by the law.

Before selling of collateralized property it should be assessed.

Collateralized property is assessed by the evaluator.

Seized property, which is to be sold on public market or auction, is transferred to the Customer or other persons appointed by the state executor (hereinafter – the keeper), and the inventory act is signed.

The person, to which the property is transferred for keeping, can use it if peculiarities of the property while utilizing won’t result in its destruction or value decrease. On possibility or prohibition to use the mentioned property, the state executor indicates in an inventory or seizure act and, if necessary, draws up another act.

Violation of the state executor’s restraint to utilize or dispose the seized property results in responsibility of property keeper, stipulated by the law.

Final stage of debt collection by bodies of the state executive service is a sale of collateralized property.

In compliance with standards of the current legislation, collateralized property is realized by specialized entities involved by tender (on a competitive base), in virtue of agreements between the State executive service and specialized entities by way of its sale on public market or auctions.

Specialized entities hold public tenders in virtue of the state executor’s application where initial property value is indicated and provided for tender on independent evaluation. If collateralized property is not sold at the indicated price on first tenders, the initial price of selling will decrease next tenders by not more than 30 % (stipulated for collateralized property – mortgage).

If amount collected from the Customer is not enough to fulfill all obligations under writs of execution, this amount is distributed by the state executor between the Bank and other possible Creditors/collectors in priority order established by the Law.

Amount collected from the debtor is distributed between the Creditors/collectors according to the writs of execution according to which court enforcement action was started and term established by the state executor for voluntarily fulfillment of the decision is expired, as of the day of transferring collected amount to the deposit account of the state executive service.

If within 2 months the Customer’s property transferred to the trade organizations is not sold, this property is to be reassessed. If after the reassessment the property is not sold within one month, the sate executor informs of it the Bank and proposes it to remain unsold property in its ownership.

If the Bank wished to remain the property in its ownership, it is obliged, within 15 days after having received information from the state executor, to transfer to the deposit account of the state executive service a difference between the value of unsold property and amount of funds which are to be collected in its favor, if the value of unsold property exceeds the debt amount which is to be collected according to a writ of execution. Funds transferred by the Bank are used to pay expenses relating to execution actions; execution commissions are collected, and rest of funds is returned to the Customer. 

Resolution on intention to remain collateralized property in the ownership as fulfillment of obligations by the Customer under the Contract is approved by the Management Board of the Bank after preliminary consideration of this issue by Bade Loan Committee provided by Distressed Assets Recovery Unit of the Bank.

Distressed Assets Recovery Unit provides the above mentioned issue for consideration of Bad Loan Committee within terms that doesn’t exceed 3 (three) days after having received appropriate message  from the state executive service.  Bad Loan Committee considers the issue and makes an appropriate decision within 2 (two) days. Then, the Management Board of the Bank within the shortest period but not later than 5(five) days before the term of official informing the state executive service of intention to get collateralized property in the ownership, on account of debt repayment under the Contract, validates the decision made by Bad Loan Committee or approves the resolution on refusal of proposed variant of the Customer’s debt repayment under the Contract.

Distressed Assets Recovery Unit informs in a written form of approved resolution the state executive service within a certain term.

If the Bank doesn’t inform in a written form of its intention to remain unsold property in its ownership within 15 days, the property seizure will be cancelled and returned to the Customer, and a writ of document is returned to the Bank not being fulfilled.

The property is transferred to the Bank at evaluation it was transferred to be sold.

Repossession of funds and other property of the Customer

Cash in national and foreign currency in the cash desk or other depository of the Customer is foreclosure by way of its immediate withdrawal. An appropriate act on it is drawn up by the state executor.

Confiscated cash in national currency is transferred to appropriate financial entity to be transferred to the Bank account not later than next day.

The state executor repossesses the Customer’s funds allocated in other credit entities, in order stipulated by the Law.  

If after having seized the Customer’s funds allocated in other financial entities by the state executor, the Customer doesn’t follow deliberately the court decision and opens new accounts in banks or other financial entities, the state executor sends materials to appropriate law enforcement bodies on bringing of certain delinquent persons to criminal responsibility.  

If the Customer doesn’t have funds enough to cover the debt under the Contract, other property which is in the ownership of the Customer is to be foreclosure.

The amount collected from the Customer by the state executor is used in the first priority to return down payment of the parties (if this fact was detected) and other persons while conducting executive actions, in the second priority the expenses of the State Executive Service which were used to conduct executive actions, not covered by down payment of the parties and other persons are compensated, and the third priority – the Bank’s demands are satisfied and executive fee is charged.  Executive fee is charged in proportion to the Bank’s demands satisfaction.

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