Bankrupt's property at auction: what to check before you bid
A low starting price is not a discount but a reason to check the lot more carefully. Once you buy, the property's risks become yours.
A debtor's property is sold at auction through an electronic trading system, and the auction is ordered by the arbitration manager (Article 68 of the Code of Ukraine on Bankruptcy Procedures). Participants have equal access to information about the property (ibid.), so requesting documents is your right. Here is what to check before paying the guarantee deposit.
1. The bankruptcy case
Find the case number in the announcement and look it up in the Unified State Register of Court Decisions and the "Case status" service. Note the stage of the procedure, any complaints about the arbitration manager's actions and any disputes over this particular property.
2. Arrests and register entries
From the day the debtor is declared bankrupt, arrests of its property are lifted and new ones are not allowed (Article 59(1) of the Code). Before buying, order an extract from the State Register of Real Property Rights and check which entries it shows as of today.
3. Collateral
If the property is pledged, ask the arbitration manager how this is reflected in the terms of sale. The pre-emptive right of purchase does not apply at auction (Article 68 of the Code).
4. The land under the property
Check the plot in the State Land Cadastre: ownership or lease, lease term, designated use. A building without a clear right to the land is a reason to stop and look into it.
5. Documents and physical condition
Request the title and technical documents and inspect the property on site. Photos in the announcement do not always show the state of the utilities or who is actually using the premises.
6. Location
Check whether the property is in or near a combat zone: access to the property and its real value depend on it.
7. Auction terms
The amounts of guarantee deposits and the procedure for returning them are set by the Cabinet of Ministers (Article 68 of the Code), and the specific terms are stated in the announcement. Read them before paying the deposit. If the auction is a repeat one, find out why the property did not sell before.
Quick start
The free lot risk card on the website shows a lot's basic risks (collateral, location, repeat auction, lease rights or a share). A full check of documents and registers is a separate service.