Bankruptcy of legal entities. Concept, signs, stages, rights of creditors, legal consequences

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Published: 10/12/2020

What does the concept of bankruptcy or insolvency of a company mean? In what cases is it advisable to carry out this procedure and why? What legal acts regulate the implementation of such an event in Russia? And how does the liquidation of an LLC occur? Let's take a closer look at the main nuances.

The concept of bankruptcy of legal entities and bankruptcy procedures

From a legal point of view, bankruptcy is a special legal situation of a legal entity in which it is no longer able to fully meet its monetary obligations to creditors.

Insolvency or bankruptcy must be proven and confirmed in an arbitration court. It is the presence of outstanding monetary obligations that is a legal reason for creditors to go to court. The composition and amount of the debt is indicated taking into account the date when the interested party files a claim.

The legislation of the Russian Federation establishes the need to undergo several bankruptcy procedures. Their types are enshrined in the Civil Code of the Russian Federation:

• observation. The procedure and scheme of the monitoring procedure are aimed, first of all, at preserving the property owned by the debtor, as well as at the ongoing verification of its financial condition and economic activities;
• financial recovery. The essence of this procedure is that it gives the debtor a chance to improve his current economic situation, for example, through investments, and protect his own organization from further bankruptcy;
• external control. External management as a bankruptcy procedure consists of appointing an arbitration manager who temporarily assumes obligations to monitor the current economic activities of the organization;
• bankruptcy proceedings. This procedure should be understood as certain actions in relation to the debtor, aimed at promptly satisfying the creditors' claims in full. Bankruptcy proceedings are conducted by a bankruptcy trustee;
• settlement agreement. It is a bankruptcy procedure for a legal entity, in which bankruptcy proceedings may be terminated if the reason for this was a settlement agreement between the creditor and the debtor. The settlement agreement is concluded at the mutual request of the parties. The legal nature of the settlement agreement distinguishes it as a special document, which may be the main and only basis for canceling court proceedings.

Suspension of proceedings

Court proceedings related to bankruptcy can not only be terminated, but also temporarily suspended. This happens if the debtor, creditor or legal representative of each of them submits a corresponding petition to the arbitration court:

• On appealing certain judicial acts
• On appealing decisions made by a meeting of creditors
• Any other petition drawn up in accordance with the regulations of the Arbitration Procedure Code of the Russian Federation

If the court has made a decision to suspend the process, then, according to Article No. 52 of Federal Law No. 127, it cannot use other procedural acts during this period. But it has the right to make determinations regarding the current case.

The court's decision to temporarily suspend the process is made based on an application from either party. An indispensable condition is that it must contain reasonable and legal grounds for suspending the process.

ATTENTION! When submitting an application, the representative of the debtor company must have with him not only a notarized power of attorney, executed accordingly, but also the statutory documentation of the legal entity

All about bankruptcy of legal entities in the Russian Federation

The grounds for declaring an organization bankrupt, the definition of concepts, the procedure, the rights and obligations of the parties involved - all this is regulated by the articles of Federal Law No. 127-FZ.

The actual inability of a legal entity to fulfill its financial obligations to creditors, pay mandatory payments, and also pay employees, in accordance with the terms of the concluded employment contract, leads to the company resorting to bankruptcy proceedings.

Insolvency (bankruptcy)

In accordance with Article 2 of the Bankruptcy Law, insolvency (bankruptcy) (hereinafter also referred to as bankruptcy) is the inability of the debtor recognized by the arbitration court to fully satisfy the claims of creditors for monetary obligations, for the payment of severance pay and (or) for the remuneration of persons working or working under an employment contract, and (or) fulfill the obligation to make mandatory payments.

The bankruptcy process begins with the filing of an application to the arbitration court to declare the debtor bankrupt. The application can be submitted by the debtor, bankruptcy creditor, authorized bodies, as well as an employee or former employee of the debtor who has claims for payment of severance pay and (or) wages.

Explanation

Insolvency (bankruptcy) of a legal entity is the inability of a debtor recognized by an arbitration court to fully satisfy the claims of creditors for monetary obligations and (or) to fulfill the obligation to make mandatory payments.

The essence of the bankruptcy procedure is that a legal entity that is unable to pay its debts in full pays the debts at the expense of its property, after which it is liquidated. Unpaid debts for which the organization did not have enough funds are written off.

Bankruptcy allows you to clear the economic turnover of debts that still cannot be collected due to a lack of property.

For participants (shareholders), declaring a legal entity bankrupt allows them to start their lives with a clean slate, without being burdened with debts that are unrealistic to pay.

The insolvency (bankruptcy) of a legal entity is regulated by Article 65 of the Civil Code of the Russian Federation (Civil Code of the Russian Federation) and Federal Law dated October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)”.

The bankruptcy procedure does not apply to state-owned enterprises, institutions, political parties and religious organizations. A state corporation or state company may be declared insolvent (bankrupt) if this is permitted by the federal law providing for its creation. A fund cannot be declared insolvent (bankrupt) if this is established by law providing for the creation and operation of such a fund (clause 1 of article 65 of the Civil Code of the Russian Federation).

The grounds for declaring a legal entity insolvent (bankrupt) by the court, the procedure for liquidating such a legal entity, as well as the order of satisfaction of creditors' claims are established by the law on insolvency (bankruptcy) (clause 3 of Article 65 of the Civil Code of the Russian Federation).

The debtor, bankruptcy creditor, and authorized bodies have the right to apply to an arbitration court to declare a debtor bankrupt (Clause 1, Article 7 of the Federal Law of the Russian Federation of October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)”).

Collection through the Federal Bailiff Service

Russian legislation considers collection through the federal bailiff service as a logical continuation of judicial proceedings in cases where the debtor voluntarily does not pay the debt.

Contacting the federal bailiff service is quite simple - you need to prepare a short application, attach a writ of execution, and submit these documents to the bailiff service department at the debtor’s location. Everything else is the work of the bailiffs; the claimant has every right to do nothing else, but simply wait for the money to arrive in his bank account.

It all looks great, but as always, Russian reality makes its own adjustments.

There are only two main nuances:

Firstly, in the vast majority of cases, bailiffs are overloaded with work, and the next application actually ends up “in the queue.” And although the legislation provides for a fairly short period during which the bailiff must execute the court decision, this period is observed extremely, and extremely rarely. Especially if no one actively interacts with the bailiff.

Secondly, the financial liability of the debtor is limited to the property he has (for an individual, not even all the property). It is recommended to always remember this. If you are owed billions of rubles by persons who do not have these billions and never had them, the chances of receiving the debt to which you are legally entitled are close to zero. There has been no debt trap in Russia for a long time, so for many, not paying off debts is “not at all scary.”

These nuances make collection through the federal bailiff service a method with very low effectiveness.

Signs of bankruptcy

1) The presence of a total outstanding debt on obligations in the amount of at least 300,000 rubles (for organizations) and at least 500,000 rubles (for individuals);

2) The outstanding debt is overdue for more than 3 months.

3) Failure to fully satisfy the claims of all creditors for monetary obligations.

All of the above conditions (signs of bankruptcy) must be met simultaneously in order for a person to be declared insolvent (bankrupt).

Bankruptcy procedures

When considering a bankruptcy case of a debtor - a legal entity, the following procedures are applied:

• Supervision is a procedure applied to a debtor in a bankruptcy case in order to ensure the safety of his property, conduct an analysis of the debtor’s financial condition, compile a register of creditors’ claims and hold the first meeting of creditors.
• Financial recovery is a procedure applied to a debtor in a bankruptcy case in order to restore his solvency and repay the debt in accordance with the debt repayment schedule.
• External administration is a procedure applied to a debtor in a bankruptcy case in order to restore his solvency.
• Bankruptcy proceedings are a procedure applied in a bankruptcy case to a debtor declared bankrupt in order to proportionately satisfy the claims of creditors. After the debtor is declared bankrupt, bankruptcy proceedings are introduced.
• When considering a bankruptcy case of a citizen, including an individual entrepreneur, the following are applied:
• Restructuring of a citizen's debts;
• Sale of a citizen's property;
• Settlement agreement.

Collection using a collection agency

Today, the word “collectors” often evokes unpleasant associations.

Many are sure that this is the legal definition of bandits.

In fact, selling the debt to collectors or turning to the help of collection agencies is sometimes the only chance to get at least part of your money. It should be noted that large collection agencies use legal methods of collecting debt. And in my practice, the work of such agencies is really effective.

However, it is important to understand the following:

To pay for the work of a collection agency, you will need to pay a fairly significant amount - from 20% of the debt amount and above. The price depends on the complexity of the situation. And it can be very high, up to 90% of the debt amount, especially if you want to sell the debt to collectors.

Collection agencies always analyze information about the debtor before accepting a debt. When it is very difficult to find the debtor or his representatives, when the debtor is a legal entity with minimal authorized capital, no property, and in other difficult situations, the collection agency will not deal with such debt, or will ask for a very high price.

Such legal methods of interaction with the debtor as claim correspondence, judicial work, and bankruptcy procedures are not the specialization of collection agencies. In this connection, it is advisable to turn to them when these methods either did not produce results, or when there is an understanding that these methods will be ineffective (preferably at the earliest stage of debt occurrence).

Subsidiary liability of managers and owners in case of bankruptcy of an organization

The Bankruptcy Law establishes the possibility of bringing managers and owners of a company to subsidiary (additional) liability in the event of bankruptcy of this organization. Such liability does not always apply, but only when certain circumstances occur (the fault of managers and owners). For these purposes, the Bankruptcy Law introduced the concept:

A person controlling the debtor is a person who has or had, for less than three years before the arbitration court accepted the application for declaring the debtor bankrupt, the right to give instructions that are binding on the debtor or the opportunity, due to being in a relationship with the debtor of kinship or property, official position, or to otherwise determine actions of the debtor...

The persons controlling the debtor may include some managers (management staff) and owners of the company.

Vicarious liability may extend to persons who are recognized as persons controlling the debtor.

Structure of the Federal Law of October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)”

Federal Law of October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)” is structured as follows:

The law is divided into chapters. For example, “Chapter I. GENERAL PROVISIONS.” There are a total of 12 chapters in the law;

Chapters consist of articles. For example, “Article 11. Rights of creditors and authorized bodies.” There are a total of 233 articles in the law;

Articles may consist of paragraphs. For example, “Article 17. Creditors’ Committee” consists of eight paragraphs. Items are marked with Arabic numerals (1., 2., 3., etc.). It is common practice to divide an article into parts, and then into clauses and sub-clauses, but in the Bankruptcy Law the clause is divided into clauses, and not into parts;

Points are made up of paragraphs. For example, paragraph 3 of Art. 17 consists of seven paragraphs. Paragraphs are not indicated by numbers or letters.

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Author:

Vladislav Kvitchenko

CEO . Practicing lawyer in the field of bankruptcy of individuals. persons Since 2015, she has been successfully handling insolvency cases. Vladislav is brilliantly versed in bankruptcy law, gives expert comments on legal situations and actively publishes in specialized publications.

VAT in bankruptcy

Transactions involving the sale of property and (or) property rights of debtors recognized as insolvent (bankrupt) in accordance with the legislation of the Russian Federation (clause 15, clause 2, article 146 of the Tax Code of the Russian Federation) are not recognized as subject to VAT.

This rule was introduced on January 1, 2015 by Federal Law dated November 24, 2014 N 366-FZ.

VAT is not paid only if the debtor is declared bankrupt. This decision is made before the bankruptcy stage of bankruptcy proceedings. At all other stages of bankruptcy, VAT is paid by the debtor.

The regulatory authorities believe that work and services performed by a bankrupt are subject to VAT, since in paragraphs. 15 paragraph 2 art. 146 of the Tax Code of the Russian Federation does not provide for their exemption from taxation (Letters of the Ministry of Finance of Russia dated October 30, 2015 N 03-07-14/62525, dated May 6, 2015 N 03-07-11/26074, Federal Tax Service of Russia dated August 17, 2016 N SD-4- 3/ [email protected] ).

VAT until 01/01/2015

Until 01/01/2015, the sale of bankrupt property was subject to VAT, but this VAT was withheld and paid by the tax agent (clause 4.1. Article 161 of the Tax Code of the Russian Federation - repealed from 01/01/2015).

Declaring a legal entity bankrupt

Going to court to declare an enterprise bankrupt is a necessary measure to save an unprofitable business. If the company’s inability to fulfill its obligations was foreseeable, then the founders of the legal entity have the right to apply to the court to initiate bankruptcy. In this case, the chance to minimize financial losses is higher. You can contact a company that will provide you with legal services and significantly reduce the time spent on legal proceedings.

However, the law indicates the debtor’s obligation to submit such an application when the following circumstances occur:

• fulfilling requirements to some creditors will make it impossible to repay obligations to others;
• the authorized body of the company decided to submit the debtor’s application to the court;
• recovery of property will lead to the impossibility of further activities;
• there are signs of insolvency in the organization;
• employee benefit obligations are overdue by more than three months.

Signs of insolvency of a legal entity

Criteria determining the insolvency of a legal entity:

• inability to make payments under contracts, mandatory payments;
• insufficient amount of property and active funds.

Some types of insolvency should be distinguished:

• temporary – allows you to avoid bankruptcy when developing an appropriate anti-crisis strategy;
• chronic - means a significant excess of the share of funds absorbed by various expenses (including fines for non-payment) in relation to profit;
• absolute – financial recovery is impossible or the expected period for it exceeds the limit established by creditors.

Subjects of bankruptcy

• Debtors are legal entities and entrepreneurs.
• Creditors.
• Arbitration managers.
• State authorized bodies.

The goals of bankruptcy are to protect the debtor from the actions of creditors, to protect creditors from the unlawful behavior of the debtor. As a result of the measures taken to improve the health of the enterprise and preserve its vital activity, accumulated liabilities are repaid as much as possible, if possible. If, despite all the measures taken, it is not possible to fully pay off the debts, the debtor is declared bankrupt with the sale of its assets, excluding the company from the Unified Register, that is, the company is liquidated.

Thus, at the local level, the essence of bankruptcy is the restoration of the normal solvency of the debtor and the final fulfillment of obligations through the reorganization or liquidation of the enterprise. The current institution of bankruptcy at the highest level protects the interests of all participants in the procedure and, through the exclusion of unprofitable business entities, is aimed at strengthening the economy and improving the market situation of the country.

Bankruptcy tasks

• repayment of debts to creditors;
• restoration of the conditions necessary for a legal entity to continue its business.

Reasons for the procedure

In accordance with the provisions of the above federal normative act, the grounds for declaring a legal entity bankrupt should be considered:

• the presence of debt to pay creditors' claims for a period of more than three months;
• the total claims against the debtor exceed three hundred thousand rubles;
• presence of delays in obligations to employees in the form of payment of wages and severance pay, as well as in obligations arising as a result of causing harm to the life and health of individuals. The period of such delay required to initiate a bankruptcy case of a legal entity is determined by the arbitration court during the consideration of the submitted application from persons authorized to take such action;
• the presence of delays in the execution of court decisions if a writ of execution was issued based on such a decision.

All these debts can be considered as debts to various groups of creditors, which may also include government agencies and funds.

Financial recovery: essence and methods

As the name suggests, the procedure is of a “health” nature and is aimed at preserving the company and restoring solvency.

A financial recovery plan is being developed with specific proposals for repaying the debt and restoring the company's solvency.

The plan is subject to approval by the meeting of creditors.

For the period of financial recovery:

• All creditor claims are submitted in accordance with the provisions of Federal Law No. 127.
• Measures to seize property and other interim measures are cancelled.
• Enforcement proceedings are stopped.
• A ban is introduced on the allocation of shares in the authorized capital and their sale.
• Strict control is introduced over any means of terminating the debtor's obligations.
• The accrual of fines, penalties and other financial sanctions is stopped.

The procedure is introduced for a period of no more than 2 years; an administrative manager is appointed for the entire period of the bankruptcy procedure.

Criteria for bankruptcy of an enterprise

Official recognition as bankrupt is not possible in all cases, but only if the conditions specified by Law No. 127-FZ are met. In addition to the mandatory reasons, there are indirect signs by which an experienced manager can already understand that the organization is in crisis. This is, first of all, a lack of available funds; low level of liquid assets; refusal of credit lines by financial institutions; accumulation of debts on wages, taxes, settlements with contractors; low business profitability; tough competition in the market, etc.

But all of the listed basic criteria are still not enough - those debtors who meet the requirements of Law No. 127-FZ can be declared insolvent. These special conditions for the amount and time of debt are listed in Stat. 3, 6 and 33 of the Insolvency Law. What are they?

Informal signs of enterprise insolvency

In addition to the formal concept and signs of the bankruptcy insolvency procedure described in Articles 2 and 3 of the Federal Law, there are also informal signs of determining the debtor’s inability to conduct further business activities in the proper volume.

1. Financial. It consists of identifying sharp jumps in the size of liquid assets, an increase in the enterprise's receivables simultaneously with a shortage of payments for the sold product. There is an increase in wage arrears to employees and a significant drop in profits.
2. Documentary. It is reflected in the company’s documentation - the deadlines for its submission are violated, the quality of financial reports deteriorates.
3. Managerial. Here the human factor plays the main role - one of the company’s managers concentrates all management on himself, or disperses authority among a large group of people, reducing the level of responsibility. There may also be a violation of the basic principles of pricing, either in the direction of reducing or increasing the cost of products.

Grounds for declaring a debtor bankrupt

1. The minimum debt period for declaring an organization bankrupt must be 3 months. from the moment of their occurrence (stat. 3). At the same time, cases on overdue debts over 3 months are accepted for proceedings, and the total period of the procedure can stretch up to 2 years, taking into account the time for reorganization of the enterprise.
2. The minimum amount of debt is set at 300,000 rubles. for legal entities (stat. 6), 500,000 rubles. – for individuals, as well as heads of peasant farms (stat. 33).

The specified grounds for declaring bankruptcy work “in pairs”, that is, the presence of only one criterion for initiating proceedings is not enough; the condition for the time of overdue debts and the amount of obligations must be met. If we talk about individual entrepreneurs, you should also remember that according to Stat. 24 of the Civil Code, citizens are liable for their obligations with all the property they own, except for their only housing, personal items, land, pets and other objects prohibited for collection by the civil procedural legislation of the Russian Federation.

Note! Full property liability does not apply to owners of legal entities - the amount is limited by the size of the authorized capital or share in it.

Drawing up a settlement agreement

Let us repeat: the settlement agreement is a kind of anti-crisis measure that gives the debtor the opportunity to pay off its obligations and not let its assets go under the hammer. The text of the settlement agreement is usually no more complicated than the loan agreement, that is, it is quite accessible to a non-specialist.

But the same rule applies here as when signing a loan agreement. Such documents may contain nuances and features that are not fully understandable to a person without special education. And when a citizen signs a document without fully understanding its content, very unpleasant surprises can await him later.

This point is especially relevant for individuals, since legal entities still have more experience working with legal documents.

Therefore, it will be useful to at least show the text of the agreement to an independent lawyer before signing. This can be done on the Prav.io portal. This will not take much time, you will receive accessible explanations of the text of the agreement, and you will be sure that it does not conceal any “pitfalls”.

Who can be declared bankrupt

Debtors who fail to make payments on their obligations for more than 3 months may be declared completely insolvent bankrupt. Initiation of the procedure is possible at the request of the enterprise - voluntary bankruptcy or at the request of creditors, as well as authorized bodies. Among the latter, the declaration of insolvency is most often initiated by tax inspectorates, social authorities - the Pension Fund of the Russian Federation or the Social Insurance Fund, the labor inspectorate, and the court.

If an organization voluntarily files bankruptcy documents, the application is submitted to the arbitration court at the place of official registration of the debtor. The form is drawn up in writing, has a unified structure and is signed by the head of the company. Documents confirming the accumulated amount of liabilities must be attached - for example, for tax payments, these can be acts of reconciliation with the Federal Tax Service, decisions or demands for payment of amounts, etc. If there are requests, they should also be presented.

After a detailed consideration of the application and if the evidence presented is justified, the arbitration court may make a decision to initiate bankruptcy proceedings in a simplified or full manner. The sequence of further actions includes monitoring, financial recovery, bankruptcy proceedings directly for the repayment of debts and a settlement agreement.

The organizational and legal form and industry affiliation of a business do not in any way limit the right of a legal entity to initiate bankruptcy proceedings. LLCs, CJSCs, OJSCs, NPFs, individual entrepreneurs, heads of peasant farms, agricultural organizations, financial structures, insurance companies, mutual funds, NPFs, professional participants in the securities market, credit cooperatives (creditor bankruptcy), developers, banks, individuals (by personal bankruptcy of a citizen), etc. The full list is contained in Law No. 127-FZ.

Legal bankruptcy, protecting the interests of the debtor and creditors, includes measures for the financial rehabilitation of the enterprise under the control of the manager. If opportunities are sought for business reorganization, the work is aimed at strengthening the financial and economic activities of the organization with the gradual repayment of all debts and a return to normal functioning.

Bankruptcy procedures for legal entities

Bankruptcy cases for legal entities are complex and multi-stage. The legislation provides for 4 main bankruptcy procedures: supervision, financial recovery, external management and bankruptcy proceedings. Completion of a bankruptcy case is also possible by concluding a settlement agreement.

Each stage, in turn, consists of many actual and legal actions of the arbitration manager, the legal entity itself and creditors.

It is extremely rare that bankruptcy cases go through all stages. Most bankruptcy cases include monitoring and bankruptcy procedures, without encountering the need and possibility of introducing other procedures. Each bankruptcy procedure is introduced by a ruling of the arbitration court based on a decision of a meeting of creditors - after the court has analyzed specific circumstances and entails certain legal consequences. Let's look at each stage step by step.

Arbitration manager

An arbitration manager is a person appointed by an arbitration court, to whom all powers to dispose of the debtor’s property and funds are actually transferred.

Depending on the procedure, it may be called differently (bankruptcy manager), but this does not change the fundamental essence. Appointed at the request of the applicant, however, in case of violations or obvious abuses during the bankruptcy procedure, he may be removed from the case and even brought to administrative or even criminal liability.

IMPORTANT: There is a misconception that if you bring “your” manager first, he will openly play along with the applicant in the bankruptcy procedure. Alas, the main task of a manager is objectivity and impartiality. He may be more or less loyal, but he has no right to openly lobby the interests of an individual creditor or debtor.

The requirements for an arbitration manager are quite serious:

• at least 2 years of experience in management positions;
• higher economic or legal education;
• internship in an SRO and subsequent membership in the organization;
• no criminal record or disqualification for tax and financial offences.

For each stage of bankruptcy, Federal Law No. 127 specifies in detail all its powers, rights and obligations. There is no point in listing them all, but it is important to focus on the most significant and affecting the interests of both the debtor and creditors.

The arbitration manager is obliged:

• Take all possible measures to protect the debtor’s assets and his property, including challenging dubious transactions that undermined the debtor’s financial and property status.
• Conduct an analysis of the debtor’s financial and economic activities, assess solvency and possible prospects for debt repayment.
• Maintain a register of creditors' claims, interact with creditors regarding inclusion in the register, identify other creditors.
• Identify signs of fictitious or deliberate bankruptcy, as well as possible abuses on the part of the debtor.

During the bankruptcy procedure, the manager has the right to:

• On your own behalf, file lawsuits to challenge transactions and apply the consequences of their invalidity.
• Apply to the court to apply interim measures to protect the debtor’s property.
• Take measures to remove the head and other authorized management bodies of the debtor.
• Receive all documents and information related to the financial and economic activities of the debtor
• Object to claims made by creditors and participate in court hearings on this issue.

In a number of bankruptcy procedures, a number of powers are transferred to the manager to fully manage the debtor for the period of bankruptcy.

Algorithm for submitting documents to court and consequences of appeal

Filing an application to an arbitration court to implement bankruptcy proceedings against a debtor enterprise has its own algorithm, which must be carefully followed, since, otherwise, the application may not be considered by the court as having no basis:

• no less than fifteen days before the date of filing documents with the arbitration court, it is necessary to notify the debtor organization of your intention to initiate bankruptcy proceedings. If the documents are submitted by the founder of the organization or its director, then such a notice is sent, first of all, to all existing creditors of the debtor. Notification occurs through the publication of information about the declared intention in the Unified Federal Register of information on the facts of the activities of legal entities;
• after the expiration of the specified period from the date of publication, if the debtor organization has not begun to take any action to pay off its existing debts, or the total amount of debt exceeds three hundred thousand rubles, although the organization has begun to pay off its existing debts, an appeal should be made to the judicial authorities;
• after the application is accepted by the court for consideration, you should declare your claims as a creditor to be included in the register of claims. In practice, this happens only after the court has considered the possibility of conducting bankruptcy proceedings for the debtor company and has appointed the observation stage.

Recommendations for drawing up an application

The petition is written according to the rules common to maintaining business documentation. That is, at the beginning of the document, in the upper right corner, there must be a “Header”, including the standard lines “To” and “From”. After this, the name is written in the center (in our case, “Petition to terminate the bankruptcy case”). Then the main text. At the end there is a signature with a transcript and the date. Marks and corrections are not allowed, regardless of whether the document is handwritten or typed on a computer.

The document content requirements are as follows:

• The name of the judicial authority conducting the case must be correctly written
• The case number must be indicated - this is necessary for its accurate identification
• All circumstances and facts of significance must be described clearly, consistently, concisely
• If necessary, the document should contain information about other interested parties
• If documents are attached to the application, the text must contain a complete list of them.
• It is necessary to indicate the legislative norm that determines the filing of the application

Start of legal proceedings

From the moment the application is submitted, a temporary manager begins his work, who is determined by the court or the party that initiated the consideration of the case. Payment for the services of such a specialist lies entirely on the applicant’s side and amounts to 25 thousand rubles for one stage.

In order to separate the fact of technical, false and deliberate bankruptcy from the real one, the Federal Law, represented by the Arbitration Court, provides the temporary manager with 7 months. During this period, the duty of the temporary manager is to analyze the financial condition of the entity and identify.

1. Is it possible to repay the debt in full by selling part of the company's assets.
2. Is there a chance to restore the economic activity of this enterprise by introducing third-party anti-crisis management or applying a set of measures for financial recovery.
3. Probability of paying wages to company employees.
4. Availability of funds sufficient to cover legal costs.

Based on his work, the arbitration manager draws up a report, which he presents at the meeting of creditors. Also, the anti-crisis manager must provide the parties to the process with a plan for returning the enterprise to solvency, taking into account the following points:

• measures aimed at improving the activities of a legal entity;
• expenses incurred by the debtor;
• the approximate time required to implement the plan.

Procedure for considering a bankruptcy case in an arbitration court

Any interested party can go to court and file a bankruptcy claim. Most often they are the debtor's creditors. But to open a case in court, two grounds must be confirmed: the legal entity has debts in the amount of at least 500 minimum wages and the statute of limitations for these debts is at least 3 months.

The statement of claim submitted by the creditor must be signed not only by the creditor himself, but also by a representative. The court considers the claim within 3 days. After consideration, he accepts it and opens the case, if there are no problems.

After the start of the review, the court determines whether the debtor has any objections to the creditor’s demands. If there are such objections, their validity is checked in the arbitration court. Already at this initial stage, a settlement agreement can be concluded between the parties.

The established procedure for legal proceedings and its principles suggest that the procedure for considering the merits of any bankruptcy case must take place within 3 months from the date of opening of judicial proceedings.

During this period, the judge can make one of several decisions:

• on declaring the said debtor bankrupt and on further opening of bankruptcy proceedings;
• on refusal to declare an organization bankrupt if there are justified reasons;
• on the introduction and appointment of a bankruptcy trustee;
• on the termination of legal proceedings regarding the bankruptcy of the organization.

The fact that a debtor has been declared bankrupt in an arbitration court must be published in the relevant printed publications at the debtor’s expense.

In the event that he does not have funds, publication is carried out at the expense of creditors.

At any stage of the case, the parties may enter into a settlement agreement.

Grounds for initiating enforcement proceedings

The basis for starting an enforcement case is the writ of execution.
The list of executive documents includes:

• performance list;
• court order;
• resolution to impose an administrative fine;
• alimony agreement certified by a notary;
• certificate issued by the labor dispute commission;
• decisions of the Pension Fund of the Russian Federation and the Social Insurance Fund on the collection of arrears in insurance premiums;
• decisions of the Federal Tax Service on the collection of lost taxes;
• notary's executor's inscription;
• other documents specified in Article 12 of the Law on Enforcement Proceedings.

Also, enforcement cases can be opened on the basis of decisions of bailiffs to collect an enforcement fee. The funds written off from the debtor's account are placed at the disposal of the SSP as a reward for the work done.

Who cannot be declared an insolvent bankrupt?

In the current economic conditions, no company is immune from the crisis. Even the norms of civil law stipulate that business is conducted at your own peril and risk. Of course, bankruptcy is sometimes the most effective way out to legally cope with problems. And who cannot be declared insolvent according to legal requirements?

Non-profit religious or political organizations, government agencies, and social movements cannot declare themselves bankrupt under any circumstances. For all other entities, recognition of insolvency is allowed only if the listed grounds for bankruptcy are met - the amount of liabilities is from 300,000 rubles. and the repayment period is from 3 months. For citizens, the minimum amount of debt is 500,000 rubles. Individuals are not limited in their ability to initiate the procedure on their own: as in the case of legal entities, this will require submitting an application and attaching all supporting documents. The difference is that bankruptcy of physicists is dealt with not by arbitration courts, but by courts of general jurisdiction at the place of residence.

Conclusion - in this material we examined the main points of recognizing bankruptcy, including signs of insolvency and conditions for declaring a debtor insolvent. The ultimate goal of complex measures, if it is impossible to fully pay off debts, is the liquidation of the enterprise and exclusion from the Unified State Register of Legal Entities/Unified State Register of Individual Entrepreneurs.

Problems and difficulties for applying for out-of-court bankruptcy

There is no judicial practice on simplified bankruptcy issues yet. From the text of the law it is already possible to draw conclusions about the problems that debtors will face:

• banks or other creditors can cancel the simplified procedure and take the case to court if they pay the mandatory costs at their own expense;
• an error in filling out the application and preparing a list of creditors (obligations) will result in incomplete write-off of debts;
• the simplified procedure can be used only after the enforcement proceedings have been completed, and the debtor has virtually no influence on the bailiffs;
• a fairly low maximum debt amount (500 thousand rubles) significantly reduces the number of citizens who can go through extrajudicial bankruptcy.

Our lawyers will help eliminate most problems to ensure that debts are written off under a simplified procedure.