Bankruptcy - what it is: the concept and types of insolvency + the main signs and stages (stages) of the bankruptcy procedure

Hello, dear readers of the RichPro.ru business magazine! Today we’ll talk about bankruptcy, what it is, what stages and stages of a bankruptcy procedure exist, on what grounds bankruptcy is determined, and the possible consequences of this procedure for legal entities and individuals.

From the article you will learn:

• What is bankruptcy (insolvency);
• What actions are performed at each stage of the bankruptcy procedure;
• What is the essence of fictitious bankruptcy and what is its difference from intentional bankruptcy;
• What are the options for the consequences of bankruptcy.

The material of this publication will be of interest to individual entrepreneurs, businessmen, people holding senior positions in enterprises, credit experts, credit debtors, students and anyone who would like to improve their knowledge in the field of finance.

You will receive answers to data and other additional questions right now!

The concept of bankruptcy - what it is, how the bankruptcy proceeds and what stages and stages an individual and company need to go through, what consequences will be from a deliberate (fictitious) bankruptcy

1. The concept of bankruptcy - the nature and meaning (+ review of the Federal Law (FZ) on insolvency)

Not a single company is insured against undergoing bankruptcy proceedings. Any enterprise that cannot meet its obligations to creditors can face this problem.

Read about bankruptcy of legal entities in a separate material on our website.

In addition to companies (enterprises), an individual can be declared bankrupt.

1.1. Bankruptcy Definition

Bankruptcy (insolvency) It represents the inability of the debtor to answer his debts and fully satisfy the financial requirements of the creditors, as well as to pay all mandatory payments.

In other words, insolvency is the state when the enterprise cannot pay on bills submitted to him.

According to the law, a citizen (enterprise) can be declared insolvent if the corresponding obligations were not paid by the debtor within 3 (three) months.

1.2. Origin of the term

The concept of "bankruptcy" is derived from the Italian phrase "Banca rotta", which means “broken bench”. At that time, the bank was called the bench on which the usurers carried out their transactions. In the event of the ruin of the moneylender, he broke the bench, thereby declaring himself bankrupt.

1.3. Bankruptcy Law (can be downloaded here)

Federal Law (Federal Law) on Insolvency: Bankruptcy Law No. 127-FZ as amended in 2016 and No. 154-FZ as of June 29, 2015

Now in the Russian Federation the Federal Law No. 127-ФЗ “On insolvency (bankruptcy)”, effective since September 27, 2002, which defines the concept of bankruptcy and regulates the implementation of all stages of the insolvency procedure.

In order to legal or natural person were declared bankrupt it is necessary to begin consideration in the arbitration court of the case on declaring the debtor bankrupt.

Download the Bankruptcy Law of Individuals (from 29.06.2015)

Download the Law on Bankruptcy of Legal Entities (as amended by 13.07.2015)

A statement to the court can be written by the creditor or debtor. If necessary, the application may also be submitted by an authorized person. An application is written if the company or individual does not pay its debts for three months.

The amount of non-payment is specified in the current legislation. Currently, for individuals it is set at 500 000 rub., and for legal entities - 300 000 rub.

Legal entities by which the court ruled on their insolvency are entered into unified federal register.

Consider the main signs and types of bankruptcy in more detail

2. The characteristic signs of bankruptcy - goals and types

Bankruptcy Recognition not free its completely from paying debts. This is only an opportunity to pay off obligations in other ways or partially to free oneself from the claims made by creditors.

Debtor will pay debts until he has immovable and movable property or until they are fully paid off.

2.1. Goals and types of bankruptcy

The main goal of bankruptcy for legal entities - the closure of the business or its radical reorganization.

For individuals, the goal of initiating bankruptcy proceedings - stop the constant growth of loan obligations.

There are such types of bankruptcy:

• The real - bankruptcy, in which a person due to significant financial losses cannot, on his own, improve his solvency;
• Conditional (temporary) - the situation when the asset of the enterprise is growing, and the liability is decreasing, this situation is typical for enterprises that engage in trade, as they may accumulate unsold products;
• Intentional - unlawful act committed by company owners to withdraw funds from the company;
• False - a deliberate declaration of bankruptcy, in order to obtain from the creditors the corresponding concessions and preferential terms for repaying the debt. These actions are criminally punishable.

The judicial authorities are responsible for determining the type of bankruptcy and initiating the appropriate procedure.

2.2. Signs of Bankruptcy

There are formal and informal signs of insolvency.

Formal signs are:

• insolvency - a person cannot pay off his debts;
• clearly lack of cash;
• a significant excess of the company's expenses over income.

Informal signs are:

• change in pricing policy;
• change in the external balance of a legal entity;
• the debt to employees on wages is growing, as well as the debt to pay contractors for work performed and services rendered;
• there is a regular delay in the payment of dividends to investors;
• reporting is late;
• There are many inaccuracies in accounting documents.

If the persons are creditors (or represent the interests of these creditors) and represent authorized bodies, then they can file a bankruptcy case with a court.

The main stages (stages) of the bankruptcy procedure and the features of their conduct

3. How is the bankruptcy (insolvency) procedure carried out - the main stages and stages 📎📚

Bankruptcy Procedure - This is a long process with many stages. In order to initiate bankruptcy proceedings, it is necessary, as mentioned above, to file an application with the arbitration court in accordance with the approved form.

Declaring a debtor bankrupt is always litigation. Many individuals and private firms can use the bankruptcy procedure as a scheme to evade payment of obligations. Therefore, the court must carefully consider all the nuances and circumstances of the case.

Bankruptcy initiators may be:

• Potential bankrupt (company manager, individual entrepreneur, citizen, etc.);
• Creditors (may submit an application if accounts payable were formed in the course of the business of the enterprise);
• Authorized bodies (bank, MFI).

The debtor independently declares its insolvency in such cases:

• If payment of a debt to one creditor entails the impossibility of repaying the debt to other creditors;
• During the liquidation of the company, a shortage of funds was revealed to cover all the debts of the company;
• After the sale of assets, initiated in order to cover existing debt, the enterprise will have a threat to existence.

Any financial issues arising from the reorganization and liquidation of a legal entity (enterprise) should be resolved through the court.

After the application is submitted and registered by the court, all signs of bankruptcy are checked. After this check is completed, a series of activities called stages or stages of bankruptcy proceedingsbut.

3.1. What is the procedure and stages of bankruptcy of an enterprise by law + table

Let's consider in more detail 5 (five) stages of a bankruptcy process:

Stage 1. Observation

By law, 7 months are allocated to this stage. At this time, an interim manager is appointed, who must identify the following points:

• Is debt repayment possible?
• is it possible to restore solvency;
• Is it possible to pay salaries to employees;
• whether the company will be able to cover legal costs, and whether it has enough assets for this.

The most important event of the observation stage is the organization of a meeting of creditors, where The following issues are discussed:

• further bankruptcy proceedings;
• the possibility of termination of bankruptcy proceedings due to the signing of a settlement agreement;
• the need for reorganization of the enterprise;
• bankruptcy proceedings;
• the need for a change of management.

Lenders solve all these issues by voting. This stage is mainly held by legal entities (commercial companies, factories, banks, etc.).

The procedure is carried out to maximize the integrity of the company's property, as well as to analyze and evaluate the current financial situation of the company.

The main goal of this phase - determination of the future that will befall the company in the near future.

Stage 2. Improvement

Wellness (reorganization) is carried out to improve the solvency of the company. Mandatory restriction of the rights of owners and managers of the company. However, they still manage the company. In particular, they can not dispose of their property.

For individuals, this stage is characterized by restructuring, that is, creditors are reviewing debt obligations.

Reorganization of the enterprise - protracted stage. It can stretch for 2 (two) years.

If the claims of the creditors are not satisfied during this time, the meeting of creditors may again apply to the arbitration court again.

Stage 3. External management

This stage is optional and is carried out if the court accepted decision to change company management. This happens if the manager believes that this will help restore the company's solvency. The duration of this stage is 1 - 1.5 years.

The external management procedure involves the following actions:

• removal of the head of the company from the performance of his duties;
• assignment of responsibilities for managing the company to the interim manager;
• restriction of actions of company management bodies, their responsibilities also pass to the interim manager;
• imposing a moratorium on paying off debts, that is, during this stage, the debtor may not pay bills. These funds are used to improve the financial position of the company. During this time, lenders cannot charge fines, penalties and interest.

The manager draws up an action planthen he sends it to the court, where the plan is adjusted and approved.

The plan should include:

• taking appropriate measures to eliminate existing signs of insolvency;
• debtor's expenses;
• the approximate period that is necessary to improve the solvency of the company.

Rehabilitation measures for a legal entity:

• closure of production, which has become unprofitable;
• reprofiling of the company;
• demand for repayment of receivables;
• partial sale of property at the disposal of the enterprise;
• increase the authorized capital;
• improvement of pricing policy;
• issue of securities.

Stage 4. Bankruptcy proceedings

If, as a result of the bankruptcy procedure, no settlement was signed, then the final insolvency procedure begins - liquidation of an enterprise.

The court appoints a person whose authority includes the management of all property of the company in order to pay off existing debts to creditors.

The duration of this procedure is 1 year, can sometimes be extended for another six months, for example, if the company's property has not yet been fully realized.

Details on how to close (liquidate) an LLC, including the bankruptcy of a limited liability company, can be found in the corresponding resource article.

For citizens and individual entrepreneurs, the procedure is similar: Property is seized and sold at a free bankruptcy bid.

We wrote in a separate article about how to close IPs on your own.

Currently, trading can be conducted online on the website of the single register of bankruptcies of the Russian Federation. The proceeds of the property at the auction go to creditors and employees to pay off debts. Part of the funds goes to reimburse litigation costs.

Stage 5. Settlement

If necessary, any stage of the bankruptcy procedure can be completed by concluding a settlement agreement. It is signed when a compromise has been reached between the creditors and the debtor. The result of such a compromise is the termination of the trial.

In some cases, the conclusion of a settlement agreement is facilitated by third parties, for example, interested parties (beneficiaries),intermediaries and guarantorsaccepting payment of obligations.

The settlement in fact is a full-fledged legal document. If the terms of the agreement are not met, then the creditors may again appeal to the court.

Summarize in the table all the stages of the bankruptcy procedure.

Table “Bankruptcy Procedure - Milestones”

Thus, the law provides several options for the development of bankruptcy proceedings. This may be a complete restoration of the enterprise and improving its solvency or its complete liquidation with the sale of property listed on the balance sheet of the company.

Reorganization and external management procedures allow a legal entity to streamline its activities and increase revenues from the core business of the company. This is beneficial both to the management of the company and to creditors, since a debtor with good solvency will be able to fully pay all his debts.

If restore solvency is not possible, the law also provides for the protection of the interests of creditors, since then the debtor company is liquidated, and its obligations are repaid through the sale of its property at the auction.

3.2. What is the procedure for declaring a natural person bankrupt? Step-by-step instruction on declaring insolvency of individuals and individual entrepreneurs

For individuals (citizens of the Russian Federation and individual entrepreneurs), the legislation also provides for an appropriate bankruptcy procedure.

Previously, individuals were involved in bankruptcy bailiffs and collection companies. October 2015 of the year, a Law was passed regulating the insolvency procedure for an individual.

So consider 5 (five) stepsthat must be undertaken by an individual to declare bankruptcy.

Step number 1. Bankruptcy Opportunity Assessment

An individual should assess the possibility of bankruptcy based on a financial analysis of the activity.

If the monthly income of a private person is steadily decreasing, and credit obligations are only growing, then recognition of the debtor bankrupt may be the best solution in this situation.

In more detail about the recognition and declaration of individual entrepreneurs and individuals bankrupt, we wrote in a separate article.

Bankruptcy Case Start not exempt from payment of obligationsbut the psychological pressure from lenders will be reduced.

An application to start the process of declaring a debtor bankrupt is sent to the court only if the amount of debt has reached more than 500 000 rub., and payment of obligations has been delayed within 3 months.

Step number 2. Preparation of necessary documents for submission to the arbitration court

To sue an individual, you will need to write an application in the appropriate form, as well as collect the following documents:

• Certificates that confirm the presence of debts of an individual;
• Income statement;
• Inventory of property (it must be compiled in a specific form and must be certified by a notary);
• Bank statement from the entrepreneur's account;
• Personal documents (passport, SNILS, etc.).

Specify the necessary documents for bankruptcy on the official websites of government agencies.

Step number 3. Submission of documents to the arbitration court and awaiting results

A financial analysis of an individual’s activities is carried out by a financial manager authorized by the court.

His responsibilities include:

• Identification of signs of insolvency;
• Independent valuation of property of an individual;
• Determine whether there is a possibility of debt restructuring.

Court costs and payment to the arbitration manager are paid by the debtor.

Step number 4. Harmonization of debt restructuring schedule

The term restructuring means a change in the structure of the debts of an individual. Restructuring includes:

• Extension of loan term;
• Reducing the size of the monthly loan payment;
• Cancellation of interest or penalties on the part of creditors for the time being until the restructuring procedure is carried out.

This concept includes measures to improve the financial affairs of the debtor.

Read also an article on the topic - "Restructuring of debt on a loan."

Step number 5. Sale of property

If nevertheless the debtor was officially declared bankrupt, then sale of property at auction. This happens if the company is reanimated. failed, and the income of an individual is insufficient to pay off debt.

Movable and immovable property, equipment and other property of the debtor, which has value, are put up for auction.

The only living space not put up for auctionHowever, lenders may require that a share in the property that was acquired by the debtor in the marriage be allocated.

In more detail about the bankruptcy of individuals and the consequences for the debtor, we wrote in a separate article.

So, the bankruptcy procedure helps an individual settle financial disputes and makes it possible to pay off existing debts, albeit with some losses.

What consequences are possible at the end of bankruptcy proceedings

4. Consequences arising at the end of bankruptcy proceedings

Consider what the consequences of bankruptcy after the closure of the procedure for physical and legal entities.

For companies the most serious consequence is the liquidation of the company and the sale of assets at auction.

For individuals It provides for the seizure of property and its sale at auction.

Insolvency of individuals provides for such negative consequences:

• If a citizen wants to conclude a loan agreement or take a loan, then within 5 years he must inform the creditor that he was declared bankrupt not so long ago;
• 5 years a private person cannot file for insolvency;
• A citizen cannot work in leadership positions for 5 years.

Bankruptcy of companies - the phenomenon is not accidental, it shows the economic condition that has developed in the country. If the number of liquidated firms is large, then this is a clear sign of economic instability and the presence of financial problems for legal entities engaged in this type of business.

In case of insolvency of a legal entity, the law provides for the following consequences:

• Deferred debt maturities are deemed to have arrived;
• For debt obligations interest and interest are no longer charged;
• Allowed to recover property for debts;
• Property disputes in which the legal entity took part are terminated;
• All property claims are presented to the debtor exclusively in liquidation proceedings.

5. Qualified assistance in accompanying bankruptcy proceedings 📚

Declaring a debtor bankrupt is a long process that lasts more than one year and requires a significant expenditure of strength, energy and nerves. To minimize all the costs of this procedure, it is recommended to contact specialists for help.

Currently, there are many companies that provide professional assistance in bankruptcy matters.

Appeal to such a company will reduce the costs of the process itself and achieve the adoption of an optimal decision by the court.

Professionals provide the debtor with maximum assistance in processing documents and in reaching a compromise with creditors, etc.

Bankruptcy Support Services

In the Russian Federation, several organizations specialize in supporting insolvency (bankruptcy) cases.

Let's consider some of them:

1. Stop Credit Company

The specialization of this company is work with clients having disputes with various credit organizations. Here, experts will help solve problems with forfeits, debts and arrears.

2. National Bankruptcy Center

The activities of this company extend to Moscow and the region, as well as to many other regions of the Russian Federation. This company has the opportunity to consult online with a specialist in insolvency procedure.

3. Lawyer consultation

The head office of the company is located in St. Petersburg, but the company has a developed network of branches in many cities. Here, lawyers give high-quality advice on all matters of bankruptcy and, if necessary, provide reliable legal support at all stages of the bankruptcy procedure.

4. All-Russian Bankruptcy Service

This company also has branches in many regions of the Russian Federation. She also consults clients remotely.

5. Law firm CVP

The legal supermarket TsVD provides legal support to citizens in any legal and financial matters.

The prices of these companies vary depending on the complexity of the case. Support at all stages of bankruptcy proceedings for a law firm will cost from 100 000 rubles, and individuals about 20 - 100 thousand rubles.

The Consequences of Intentional and Fictitious Bankruptcy

6. Intentional and fictitious bankruptcy - signs and consequences

Fictitious bankruptcy is called initially false declaration of insolvency the company or private personif this has caused major damage.

Important! Deliberate bankruptcy is an administrative or criminal offense.

At present, fictitious bankruptcy is a fairly common phenomenon. This procedure gives the impression of insolvency.

The idea of ​​intentional bankruptcy is usually put forward founder or company manager.

The objectives pursued in organizing the bankruptcy process may be different:

• The appropriation of the assets of the company illegally;
• Cheating company employees;
• Obtaining a delay or deviation from payment of existing debt;
• Receiving discounts on the payment of debt, etc.

Upon the closure of the bankruptcy case, such a company declares itself insolvent and creates a residual company, where inexpensive unnecessary property, unskilled personnel and debts remain.

6.1. Characteristic Signs of Intentional Bankruptcy

Any type of insolvency has the following characteristics:

• The person has monetary debt in the amount of more than 100,000 rubles.
• A person cannot repay his debt;
• Bankruptcy of a debtor is an officially recognized court;

As for intentional bankruptcy, its main specific features are:

• The debtor hid the availability of property, as well as information about its location, sold the property;
• When filing a bankruptcy petition, the fulfillment of all necessary obligations was not observed;
• Non-compliance by the debtor with the established rules of bankruptcy proceedings;
• Accounting and accounting documents were forged, and are not originals.

6.2. Identification of the presence of intentional bankruptcy

If the company had deliberate bankruptcy initiated, then this can be identified as a result of inventory and financial analysis conducted by the arbitration manager.

When checking the fictitiousness of bankruptcy, the following steps are required:

• The solvency of the company is analyzed, financial analysis is carried out;
• An inventory is made of the assets that are on the balance sheet of the enterprise;
• The verification of the legitimacy of company transactions that could contribute to the deterioration of the financial situation of the company and lead to an increase in insolvency is carried out. At this stage, transactions for the entire period are checked.

Documents audited to identify intentional bankruptcy:

• Constituent documents;
• Available data on the company's debts;
• Accounting and accounting documents;
• Documents on existing court cases;
• Audit and audit reports.

If during the documentary inspection illegal transactions were revealed, it can be assumed that such transactions are one of the reasons for the deterioration of the solvency of a legal entity.

Example of an illegal transaction may be the sale of movable or immovable property on unfavorable conditions, etc.

In addition, there are cases when intentional bankruptcy is expressed in the failure of the management of the company to fulfill its direct responsibilities.

6.3. Consequences of Intentional Bankruptcy

If during the audit it was proved that the bankruptcy of the company was initiated deliberately, then the citizen guilty of bankruptcy is subject to administrative or criminal penalty.

The Criminal Code provides for administrative punishment for intentional bankruptcy.

Responsibility for intentionally initiating bankruptcy proceedings bears the head of the company or a member of the company or individual entrepreneur.

That is, persons whose actions entailed insolvency of the company, as well as the inaction of which led to the inability to satisfy the claims of creditors.

Criminal liability is provided if the damage was especially large. The threshold value in this case is the sum - 1 500 000 rub.

If this amount of damage is more than the specified value, then such liability before the law is imposed on persons:

• Administrative fine of 200,000 - 500,000 rubles. or in the amount of the person’s income for 1-3 years;
• Referral of a person to perform forced labor for 5 years;
• Imprisonment for 6 years, an additional administrative fine of 200,000 rubles is awarded. or in the amount of the person’s income for 18 months;

If the amount of damage amounted to less than 1,500,000 rub., then the responsibility for such an act is assigned differently:

• For an individual, an administrative fine of 1,000 - 3,000 rubles .;
• An administrative fine of 5,000-10,000 rubles is imposed on the head or manager of the company. and the inability to hold managerial positions for 1-3 years.

6.4. The difference between fictitious bankruptcy and intentional

So, let us examine in more detail how fictitious and deliberate insolvency differs from each other.

At first it may seem that the concepts of fictitious and intentional bankruptcy mean the same thing. But in fact, there are a number of obvious differences between them.

Bankruptcy is intentional, which was the result of actions by managers, resulting in the inability of the company to repay existing debt to creditors. As a rule, such bankruptcy is carried out with the aim of misappropriation by a person of assets that are on the balance sheet of the enterprise.

Regarding fictitious bankruptcy, then a statement about it to the court is initially false. The main purpose of these actions - receiving deferred payment of debts or evasion of debt.

In case of major damage to a citizen who has committed unlawful actions, the following punishment is provided:

• Assignment of an administrative fine of 100,000 - 300,000 rubles. or payment of a citizen’s income for the last two years;
• Direction to perform forced labor, the term of which will be 5 years;
• Imprisonment of a citizen for 1-5 years;
• Imprisonment of a citizen for 1-6 years and payment of an additional fine of up to 80,000 rubles.

7. Bankruptcy FAQ

In this section, we will consider the most frequently asked questions regarding the passage of bankruptcy proceedings and give detailed answers to them.

Question 1. What is a simplified bankruptcy procedure and how is it carried out?

Simplified Bankruptcy Procedure The procedure is called in which the company is liquidated in the shortest possible time and with minimal financial losses for the head of the enterprise.

This bankruptcy scheme is used, as a rule, in small enterprises with few assets consisting of property and cash. Accelerated Bankruptcy Recognized During 5-7 months.

This procedure does not include attempts at reorganization or external management.Immediately after analyzing the financial, accounting and accounting documents of the company, the court decides to liquidate the company and the bankruptcy proceedings begin.

Question 2. What is a single federal bankruptcy register?

The Unified Federal Bankruptcy Register is a collection of information related to company bankruptcy cases. The registry contains information on the course of bankruptcy proceedings in the Russian Federation.

You can view this registry on the official website of the single registry on the Internet. Access to it is open to anyone.

(The official website of the Unified Federal Register of Bankruptcy Information is bankrot.fedresurs.ru)

To see more complete information, you must register on the official website. This is where all the information about companies that have been declared bankrupt or for which a bankruptcy case has been opened is contained. All data on the site is regularly updated.

Before the existence of a single registry, monitoring the progress of insolvency proceedings was much more difficult.

In a special section on the site you can find information on the ongoing bidding. There are indicated dates, kinds and bidding items. You can also find a list of items that are auctioned (apartments, equipment, non-residential premises, transport, etc.) Arrested by the arbitral tribunal.

Question 3. When is a citizen's bankruptcy his right, and when is his duty?

Many citizens do not always want to start bankruptcy litigation. But in some cases, starting a trial helps win some time and pay debts with minimal losses.

A citizen may file a lawsuit with the court to initiate bankruptcy proceedings if he assumes that he will soon become bankrupt, if there are clearly circumstances that indicate that the obligation to pay debts and obligatory payments just not possible.

In this case, the citizen must be insolvent, and also should not own property, after the sale of which he will be able to safely close all his debts.

A private person is obliged to write to the court a statement of initiation of bankruptcy proceedings against him when payment of existing debt to one creditor entails the inability to pay mandatory payments and debts to other creditors on time.

The amount of obligations should be not less than 500,000 rubles. In this case, an individual shall submit an application to the judicial authorities during 30 days from the momentwhen he found out or should have known about his inability to pay off debts to creditors.

Question 4. What limitations of a citizen's rights can be made by a court upon completion of bankruptcy proceedings against him?

At the end of the bankruptcy proceedings, the arbitral tribunal may be a ban on the exit of a citizendeclared bankrupt abroad. This prohibition will be valid until the court makes a decision on the completion of bankruptcy proceedings or until the signing of a settlement agreement between the debtor and the creditors.

From the moment a decision is made to declare a person bankrupt and from the moment the property sold on the balance sheet of the debtor began to be sold, all rights to this property, including the right to dispose of it, are exercised exclusively by the financial manager.

After the bankruptcy procedure has been closed, the bankrupt person cannot conclude loan and loan agreements, without indicating bankruptcy.

In addition, during the same period of time, a citizen cannot re-initiate bankruptcy proceedings.

Question 5. Can an apartment be sold in bankruptcy?

A debtor’s apartment can be sold if it is pledged (for example, mortgage lending).

Question 6. What are the consequences for a citizen of repeated bankruptcy?

If a citizen was repeatedly declared bankrupt, then for three years he has no right to be the head of companies.

Question 7. When a citizen is declared bankrupt, is it possible to repay at the expense of a third party his debts to the budget in the form of taxes and fees?

The Tax Code of the Russian Federation approved the norm that each taxpayer must repay its debt to the state on taxes and fees on its own.

However, several other rules are approved by the Federal Law "On Insolvency (Bankruptcy)". It legislatively establishes the possibility of a third party paying all existing obligations of the debtor. In order to do this by a third party, a corresponding application must be filed with the court.

Question 8. Is it possible to use reorganization / external management in case of insolvency of an individual entrepreneur?

No, these procedures apply only to legal entities.

Question 9. If the debtor is declared bankrupt, in what order will the claims of creditors be satisfied?

The legislation provides for the following sequence of satisfaction of claims made by creditors:

• Legal costs, payment for the work of the arbitration manager;
• Debt to citizens whose health and life were damaged;
• Debt to employees regarding the payment of benefits and wages;
• The remaining debt.

Question 10. Is the bankruptcy process the same for all companies?

As discussed above, the insolvency proceeding 5 stages. But the legislation does not provide for the need for the enterprise to go through all these stages.

Of great importance in this matter is the legal form of the company-debtor. According to this criterion, organizations can be: simple, insurance, credit, banking, city-forming and agricultural.

Without fail, all 5 (five) stages of bankruptcy must go through simple, city-forming and agricultural enterprises.

For the other three forms of organization, the possibility of a slightly different order of bankruptcy procedure is provided:

• In the event that credit organizations are bankrupt, only bankruptcy proceedings are binding;
• A feature of agricultural enterprises is that their activities are seasonal. The result of their activities is largely determined by weather conditions and seasonality. Therefore, the arbitration court may appoint for them the stage of supervision, external management and reorganization at its discretion. As for practical activities, the implementation of the appointment of the court is carried out during the season, suitable for the main activities of the enterprise.
• In insurance companies, the stages of enterprise recovery and external management are excluded from the bankruptcy process.

Question 11. What is a meeting of creditors? What issues are addressed at this meeting?

Creditors are persons who, in relation to legal or to an individual claims regarding monetary or other obligations are eligible. When holding a meeting of creditors, bankruptcy creditors and authorized bodies may take part in it.

The claims of all these entities on the date of the meeting must necessarily be displayed in the register of requirements.

A meeting of creditors is formed at any competitive process, except in cases when the company has debts to only one creditor.

The organization and conduct of the meeting is carried out by the arbitration manager for 2 (two) weeks. This condition must be strictly observed by the manager, otherwise he may be held liable. Notification of participants is also the prerogative of its activities.

The law does not provide for any liability for non-compliance with this obligation, but if the creditor proves that he did not attend the meeting because he did not receive a notice, then he has the right to raise the question of the illegality of the meeting. In this case, we are talking about the failure of the manager to fulfill his direct duties.

To creditors, incurred losses due to the convocation of the meeting, it is allowed to demand from the manager their repayment. The debtor will also incur losses, since he needs funds to convene and hold a second meeting.

The meeting should consider the following issues:

• Determining the start or end time of the reorganization and external management procedures or extending the terms of these procedures, which were agreed earlier;
• The plan of enterprise reorganization is approved;
• The schedule for repayment of existing debt is approved;
• Selection and approval of the necessary requirements that will be presented to the candidacy of managers at all stages of the procedure;
• Definition of a registry holder;
• Signing a settlement agreement;
• The decision is made that it is time to put the property of the debtor for sale to cover at the expense of the sale of existing claims for debts;
• Plenipotentiary representative is selected by voting;
• The activities of the committee of creditors are organized.

Question 12. What are the differences between arbitration, bankruptcy and external managers?

Initially, the court appoints an arbitration manager, deciding all the main points related to the organization and implementation of the bankruptcy process.

This must be a professional in his field, and he must be part of the organization of arbitration managers.

In fact, the concept of "arbitration manager"is common, and at different stages of the bankruptcy procedure, it has its own special name, depending on the functions that it performs.

The observation procedure is carried out interim manager. His competence includes resolving the following issues: conducting a financial analysis of the debtor, participating in the consideration by the court of claims for debt, etc.

During the reorganization procedure, enterprises are appointed administrative manager. His responsibility includes monitoring the implementation of the established debt repayment schedule.

The external management procedure is monitored external manager. He is obliged to take actions to restore the solvency of the company.

At the stage of bankruptcy proceedings connected to the case competition manager, which monitors the sale of the property of the debtor and from the money received, repays the debt to creditors in the order of approved priority.

Arbitration Manager It does not participate only at the last stage of the bankruptcy process - signing a settlement agreement.

Question 13. Is there a need for special preparation of the organization for bankruptcy?

If the head of the enterprise understands that he cannot avoid bankruptcy proceedings, then it is in his interests to prepare the company for bankruptcy proceedings.

It is correctly executed preparation for bankruptcy that will contribute to the successful completion of the bankruptcy case.

Conducting special training helps to reduce the risks that arise during the insolvency proceeding, examples of which may be risks:

• identify fictitious or intentional bankruptcy;
• the risk of taxation of the founder of a company or a person holding a managerial position to subsidiary liability;
• change of bankruptcy trustee in the course of business, etc.

Preparing for bankruptcy insures the company in advance against these risks, makes it possible to objectively assess the situation at the enterprise before the bankruptcy proceeding begins.

Actions that will help prepare for the initiation of bankruptcy proceedings and reduce the risks described above:

• Analysis of the existing structure of obligations, which will be the basis of the structure of debt to creditors;
• Conducting an analysis of the existing structure of assets, which will make it possible to assess the volume of property that will be put up for sale at a public auction as a result;
• Conducting an analysis of transactions that have been concluded by the head of the company over the past three years, which will make it possible to deduce the existence of illegal transactions, and thus reduce the risk of recognition of bankruptcy as deliberate;
• Analysis of the possibility of declaring bankruptcy fictitious or deliberate, as well as the possibility of holding management to subsidiary liability.

8. Conclusion + video on the topic

Thus, the bankruptcy (insolvency) procedure is a complex process, which consists of several stages. It can be simplified or complete.

At the time the court considers the insolvency case legal or individual exempt from payables, as well as interest, penalties and forfeits.

However, recognition by the arbitration court of the entity insolvent, does not exempt him from full payment of the debt. The procedure only allows the debtor to pay his obligations to creditors in a slightly different way.

Bankruptcy can be fictitious, that is, planned, for the purpose of misappropriation of assets or to obtain a deferral of payment of debts. In this case, it is a crime.

The law provides under this option administrative and criminal liability. In order to reduce the risks arising from the initiation of a bankruptcy case, it is recommended to carry out preliminary preparation, which will help to fully assess the current situation.

Experts recommend legal entities and individuals to initiate bankruptcy proceedings only as a last resortwhen it is simply not possible to solve financial issues in another way.

If you have any questions on the topic, we recommend that you watch the video from Mayak radio about the bankruptcy of individuals:

And a video about the insolvency of enterprises, where the questions “How to preserve assets”, “Why do you need bankruptcy for business,” and so on:

The team of Rich Pro magazine wishes you success in legal and financial matters. If you still have or have questions about bankruptcy, then ask them in the comments below.

Watch the video: Asset Forfeiture and Bankruptcy Case Coordination (April 2024).