INCREASING THE LEVEL OF SATISFACTION OF CREDITORS’ CLAIMS BY IMPROVING THE SYSTEM OF VALUATION AND REALIZATION OF THE DEBTOR’S PROPERTY IN INSOLVENCY PROCEEDINGS
Abstract
The level of satisfaction of creditors’ claims (the recovery rate) is one of the central indicators of the efficiency of any insolvency regime. In many transition economies, including Uzbekistan, this indicator remains low, and a significant part of the loss is attributable not to the initial insufficiency of the debtor’s estate but to systemic weaknesses in the valuation and realization (sale) of the debtor’s property. This article examines the relationship between the design of the valuation–realization mechanism and the recovery rate, and develops a set of proposals for improving this mechanism. Using a mixed-methods design that combines comparative legal analysis, descriptive statistics on insolvency cases, and a multifactor model of the recovery rate, the study identifies four principal sources of value loss: (1) systematic under-appraisal of assets, (2) the prevalence of fragmented (piecemeal) liquidation over going-concern sale, (3) excessive duration of proceedings, and (4) limited competition at asset auctions. The results indicate that the gap between appraised value and realized value, the number of repeated auctions with sequential price markdowns, and the duration of proceedings are the strongest negative predictors of the recovery rate, whereas the use of electronic auction platforms and the sale of the business as a going concern are the strongest positive predictors.
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