A Mongolian Court shall appoint a trustee to oversee operations of a company within 5 days after a request for trusteeship from the claimants in a bankruptcy proceeding.
The trustee can be either an individual or a legal entity. The trustee can be the person with higher education in law, finance and economics who does not have financial and economic personal interests in the respondent’s activities, or the legal entity has the rights and responsibilities to provide professional consulting services in the field of law, finance and economics. According to the relevant legislation, it is prohibited to being appointed the respondent’s and claimant’s management, their members, related persons or their family members shall be as a trustee.
The trustee has the following rights and responsibilities in concerning with the bankruptcy case:
- take under custody the assets of the respondent according to the court order;
- safeguard the respondent’s assets and relevant documents, conduct counting;
- if required, conduct a documentary audit of the respondent’s activities, organize such work;
- announce and convene a meeting of claimants;
- review contracts and transactions conducted prior to the start of a bankruptcy case, submit to the meeting of claimants’ proposals on whether to terminate, amend, or consider invalid the contracts and transactions specified in the relevant legislation;
- open a special account and deposit the respondent’s cash;
- conduct contracts and transactions with others on behalf of the respondent within the scope of the rights granted by the claimants’ meeting;
- obtain from the respondent relevant data and documents;
- submit to appropriate parties his/her assessment of the respondent;
- evaluate the respondent’s assets;
- hire an assistant within the limits of compensation determined by the claimants;
- sell the respondent’s assets according to the procedures set forth in the relevant legislation;
- other rights and responsibilities set forth in law.
The trustee shall make an assessment of the respondent’s activities within 20 days since the his/her approval by the court and submit the court, respondents and claimants the assessment, including financial and economic calculations of the respondent, conclusions; reasons and specific features of the respondent’s insolvency; the management’s activities; claimants’ groups and amount of each claim; and proposals on whether to recapitalize the respondent, or to liquidate upon consideration as insolvent; other data and documents deemed necessary.
In addition, the trustee has the significant rights and obligations in concerning with the respondent’s recapitalization, the allocation of its assets and liquidation process of the respondent.
The trustee will be personally liable for the damages caused the respondent due to illegal activities such as fraud and negligence, and the parties to the bankruptcy case have the right to assert a complaint to the court regarding the activities of the trustee and the court may change the trustee.