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Comments to an article entitled “Bailiffs shall be aided by collectors” made by Sergey Slagoda, managing partner of "S&K Vertikal"

20 July 2009

Some functions of the bailiff service may be transferred to private collector agencies. By doing so the Ministry of Justice expects to put an end to quasilegal "extortion" of debts. Lawyers are afraid that everything will go wrong.

The issue related to involving non-governmental structures in execution of judgments was discussed several years ago. However, today it became even more urgent due to crisis which has set bailiffs to additional work, said Aleksandr Konovalov, the Minister of Justice of Russia, the day before.

"Not but this question is a long-standing one. It has been standing too long, because while discussions were held in corridors of power, collector agencies flourished in the market of legal and even quasilegal services,” invoked him RIA Novosti, “These agencies offered their services involving recovery of debts to individuals and organisations which possessed writs of execution".

"I’d like to mistake, but, in my opinion, as the case stands, the word "collection" may well be replaced with the term "extortion", added Aleksandr Konovalov. He is apprehensive about the return of the 1990-ies," when gangsters recovered debts much more effectively than courts and judicial enforcement system".

Now the state "gives these issues the go by," said the minister. But "a much more proper and effective way to deal with these issues would be to regulate them, to establish arrangements for ensuring transparency, legitimacy and accountability," remarked he.

Minister believes that it wouldn’t be well to completely outsource the executive procedure. In his opinion, collectors could engage in securing debtors’ appearance in court, locating property to be claimed by creditors, as well as also acquisition of proofs, "confirming that though this property de jure belongs to persons affiliated with debtors, it is de facto used by them and acquired at their expense, including money probably borrowed from creditors," explained Aleksandr Konovalov.

Lawyers are afraid that even in this new position collectors shall abuse their power. Mikhail Boytsov, managing partner of Rightmark Group, says that it is a "Russian tradition". "These fears are not unfounded," agreed Sergey Slagoda, managing partner of "S&K Vertikal".

However, they discord with each other on the idea of the Ministry of Justice as such. "Currently, the bailiff service works badly. Only large debts are effectively collected,” said Mikhail Boytsov, "The bailiff service has actually outlived its usefulness," affirms Konstantin Fedorov, president of "Advokatskaya kollegiya Naryshkinykh." "There are the certain law-related functions which should be exercised by state structures. In my opinion, it is better to increase an overall performance of the bailiff service by means of reforming, than to delegate responsibility of this service to private companies," protested Sergey Slagoda.

As to collectors, they have acclaimed the idea of the Ministry of Justice enthusiastically. "By World experience, cooperation of collector agency and the SSP can be very effective,” said Irina Poddubnaya, deputy director general – Business Development Director of the collector agency "Sekvoya Kredit Konsolidatsiya". “For instance, in western countries a collector agency may collect penalties and other charges in favour of SSP. We believe that such practice may be quite successfully realised in Russia as well." Now collector commission averages out at 20 %, she added.

Note:

According to "Sekvoya", over the first four months of 2009, the volume of collector service market in retail banking credits has grown by 16,7 % (15 bln roubles) and amounts to 90 bln roubles.

dp.ru


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