The professional publication ‘Economy and Life’ published a commentary by Yunona Fridman, Senior Consultant of General Practice of Alliance Legal Consulting Group. 

‘The Ministry of Justice proposes to solve the problem of the speed of sale of debtors' property at auction by using elements of the “Dutch auction”. 

The legislator proposes to amend the Law on Enforcement Proceedings in terms of the procedure for holding public auctions for the realisation of debtor's property. 

The new regulation proposes to provide for several stages of auction within one day defined in the notice, i.e. to shorten the period of the auction procedure. The first stage will include consecutive increase of the initial price of the property by the bidders, i.e. ‘step up’. At this stage, during the first hour of the auction, one of the bidders must declare the acquisition of the property at the initial price. The bidders will then have the opportunity to increase the price every 30 minutes from the time of the next bid until 30 minutes from the last bid have elapsed. 

If none of the participants declares to purchase the property at the initial price, the auction organiser will proceed to the second stage - price reduction, using a ‘step down’. By analogy with the price increase, a half-hour interval for receiving bids from bidders will work. In this case, the organiser will be able to consistently reduce the price no more than half of the initial price of the property. 

The conditional third stage of bidding will occur when a situation arises where several bidders have confirmed the initial bid price or the same price in one of the ‘downward steps’. In this case, the organiser will come back and start again from the first step of the ‘game’ to increase. 

The novelties allow the conclusion of a contract of sale of property at the initial selling price with the only bidder, despite the fact that the auction was declared invalid due to participation in the auction by only one bidder. According to the current norm of Art. 92 this is an unconditional ground for holding repeated tenders. 

The proposed wording of Article 92 of the Law on Enforcement Proceedings in principle excludes the appointment and holding of repeated bidding, except for the case when the participant following the winner has not concluded a contract with the organiser within ten days or has not paid the full value of the property. 

The proposed amendments to the Law on Enforcement Proceedings will substantially change the existing procedure for conducting auctions, significantly accelerate and optimise the process of public sale of the debtor's property, reduce the term of the auction from several months down to one day. At the same time, the bailiff-executive will get an effective working tool for faster fulfilment of his duties to realise the debtor's property. 

Read more in the full version of the article on the "Economy and Life" website.