On February 5, we held an online seminar on the bankruptcy of housing and communal services organizations. Andrey Bezhan, who has 18 years of experience in economic disputes and bankruptcy, spoke in detail about this procedure. We believe that forewarned is forearmed. It is important for every management organization to navigate this topic.
Why will the chairman of the HOA be held vicariously liable?
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Reasons for bankruptcy of HOAs
In accordance with paragraph 1 of Art. 65 of the Civil Code of the Russian Federation, bankruptcy is a procedure for recognizing the insolvency of a legal entity by a court. Since the HOA is considered a legal entity, albeit a non-profit one, it can also be declared bankrupt with subsequent liquidation.
Bankruptcy is most often caused by debts of homeowners associations to resource supply organizations, formed for the following reasons:
- Late payment for services by residents.
- Misappropriation of funds.
- Incorrect management of the budget.
Usually the latter reason is a consequence of the unprofessionalism of the chairman and the board. If the leaders of the association cannot set priority tasks and rationally distribute funds, money for the supply of water is spent, for example, on changing double-glazed windows in the entrance.
Therefore, RSOs are forced to initiate bankruptcy proceedings for the insolvent HOA.
Fraud on the part of the chairman, accountant or the entire board can lead to similar consequences.
Who initiates bankruptcy?
Since financial insolvency is caused by the presence of debts, the procedure is most often initiated by the creditor organization - a legal entity to which the partnership owes a certain amount without repaying it within the period established by the agreement. If 90 days or more have passed since the last payment, representatives of the housing and communal services provider or another creditor file an application for the insolvency of the HOA with the arbitration court.
In addition, after analyzing the financial statements, the members of the partnership may come to the conclusion that the HOA is not able to independently repay the debt it has incurred. In this case, the general meeting decides to go to court with a claim to declare the association bankrupt.
Sometimes owners are interested in how to liquidate an HOA if there are debts. Unfortunately, in this case, standard voluntary liquidation is not possible. The partnership will be closed in court if an insolvency claim is filed.
Consequences
What to do next if the HOA is declared bankrupt? If the court comes to the conclusion that repayment of all debts and restoration of the financial capabilities of the organization is impossible , it ceases to exist according to bankruptcy rules. A corresponding entry is made in the registers.
Residents are raising the issue of a new governing body. A new partnership can be , at the helm of which will be those who will be more competent from the point of view of a manager and more honest and careful in handling money.
It is impossible to completely protect yourself from this probability, but you can reduce it as much as possible. To do this, you need to regularly ask your homeowners association to provide reports. This will save you from many unpleasant surprises and proceedings.
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Personal responsibility of the HOA chairman
The chairman is the head of the association. He makes decisions regarding the work of the HOA, and also monitors the implementation of the organization’s budget plan. If there is any suspicion of the integrity of this official, his actions are subject to careful scrutiny.
First of all, signs of deliberate bankruptcy, fraud or theft should be excluded. If they are discovered, the chairman is brought to administrative and even criminal liability.
If the manager’s activities comply with the standards, he is not responsible for the presence of debt. All debts are repaid from the property of the partnership.
The procedure for declaring an HOA bankrupt
Regardless of who the initiator is, the bankruptcy process begins with the submission of a corresponding statement of claim to the arbitration court. After this, there are several stages of the procedure. Their number and terms of consideration depend on the number of creditors, the size of the debt, the presence or absence of property from the debtor and other circumstances of the case.
Among the stages are:
- observation,
- financial recovery,
- external control,
- bankruptcy proceedings.
Since the HOA is a non-profit legal entity, its insolvency is often recognized at the observation stage. A temporary manager is appointed who must:
- analyze the amount of debts;
- evaluate assets;
- draw up a register of creditors.
The implementation of these actions is followed by the liquidation of the HOA.
As part of bankruptcy proceedings, the property of the association is described and seized for subsequent sale at auction. This allows you to pay off debts to creditors.
Four bankruptcy procedures you need to know about
The bankruptcy procedure has a number of criteria and stages that need to be taken into account. The first two stages - observation and financial recovery - are considered not bankruptcy procedures, but insolvency procedures. In this case, the company is classified as having problems and the state introduces control over its activities to prevent causing even greater losses to its counterparties.
The purpose of the monitoring procedure is to analyze the financial condition of the debtor. It is at this stage that it will be clear what consequences will arise for the company. The analysis period is 7 months and can be extended.
At this stage, a temporary manager is appointed. Its task is to collect information regarding the debtor’s property, prevent episodes of withdrawal of assets through control over the activities of the organization, and coordinate a number of transactions.
The temporary manager does not have the right to interfere in business activities and remove the organization’s management from management. Control remains with the organs of the organization, but with limited powers.
The second stage is financial recovery. The purpose of this procedure is to restore solvency and repay debt in accordance with the debt repayment schedule. The duration of the stage does not exceed 2 years.
The essence of the procedure is that the meeting of creditors approves the debt repayment schedule and monitors its implementation. At this stage, control remains with the organs of the organization, but with limited powers.
This is one of the rarest bankruptcy procedures. It is almost never used, since the very introduction of a bankruptcy procedure means that the organization is unable to make payments.
The third stage, no less rare, is external management. Its goal is to restore solvency in accordance with the external management plan. It is carried out over 18 months. Control passes to an external manager, who develops a plan for the company to overcome the crisis.
Bankruptcy proceedings are the final stage of the bankruptcy procedure, followed by the liquidation of the organization. The purpose of the procedure is to repay creditors' claims at the expense of the debtor's property.
The bankruptcy proceedings last for 1 year. This is a suspended sentence and the procedure may take several years. The condition for the extension is the non-completion of measures to form the bankruptcy estate, to bring controlling persons to subsidiary liability, and to challenge transactions. The peculiarity of the procedure is that control over the debtor’s activities is transferred to the bankruptcy trustee.
The nuances of liquidating a partnership
Expert opinion
Novikov Konstantin Yakovlevich
Lawyer with 8 years of experience. Specialization: family law. Extensive experience in protecting legal interests.
If the HOA does not pay off its debt during the bankruptcy procedure, it will be liquidated. However, insolvency is not the only basis for terminating its activities.
An association of owners may terminate its work for the following reasons:
- liquidation of the HOA by court decision;
- termination of the partnership's activities at the initiative of the residents.
Closing by court order occurs on the initiative of supervisory authorities that have identified any violations.
An organization may terminate its activities voluntarily if the corresponding decision was made by its founders - the owners of premises in the apartment building. This issue is raised at the general meeting by the chairman, members of the board or one of the participants of the partnership. The process of discussing the proposal and the voting results are reflected in the minutes.
A sample protocol on the liquidation of an HOA may look like this.
The liquidation commission created at the same meeting is obliged to submit documents to the registration authority and notify the Federal Tax Service. After this, counterparties and creditors are informed about the liquidation.
What is an HOA?
A homeowners' association is a non-profit association of owners of premises in an apartment building, created for the purpose of joint management of common property. The HOA may own one or even several houses located nearby. To organize a partnership, more than 50 percent of the property owners must vote favorably at the general meeting.
The meeting participants adopt the charter of the legal entity, which defines the basic principles and features of the HOA’s work. To implement the founding document, members of the board and an audit commission are elected - the executive bodies of the partnership.
The association is created to manage, maintain, preserve and enhance common property, as well as to ensure the provision of public services to residents.
Although the partnership initially does not have its own material and technical base, and decisions are not made by specialists, its work is quite effective, since the owners are most interested in creating comfortable conditions.
Read more about what a homeowners association is.
HOA property
The property of an association that can be sold during bankruptcy includes movable and immovable objects acquired with the joint money of members of the partnership:
- transport;
- office and technical equipment;
- funds in bank accounts.
During the insolvency procedure, namely at the stage of bankruptcy proceedings, this property is subject to sale at auction. The proceeds should be used to pay off debts in accordance with the register of creditors.
If the proceeds are not enough, creditors are notified and the bankruptcy case is dismissed.
Residents of a building are often concerned about whether the founders are liable for the debts of the HOA. They should know that the property of the chairman and members of the partnership is not seized or sold during the bankruptcy of the association.
In accordance with paragraph 6 of Art.
135 of the Housing Code of the Russian Federation, the owners of residential space are not responsible for the partnership, just as the HOA itself is not responsible for the actions of residents.
Creation of a new organization
If the Homeowners Association has been liquidated, its members have the right to immediately create a new organization. The new HOA can begin its work in the same year. However, there are situations when the court prohibits the creation of another Partnership.
This happens if the previous organization was closed due to debts of the homeowners. For obvious reasons, there is no confidence that the new chairman will be able to influence the owners, that the residents will pay off their debts and will not accumulate them in the future, and that the new HOA will not go bankrupt through their fault.
To resolve any disagreements that have arisen between the members of the HOA and its chairman, it is recommended to seek the help of a qualified bankruptcy lawyer. It will also help you understand what is the best course of action: try to solve the problems yourself or go to court.
So, if the Partnership has debts, its liquidation is carried out practically according to the same scheme as the closure of a legal entity. After the procedure, the owners have the right to create a new organization, unless the court prohibits doing so. When the debtor Partnership is closed, the company's property is sold, and debts are paid in accordance with the register of creditors.
Consequences of bankruptcy for property owners
After the termination of the service organization's activities, the owners will again have to choose a form of management. They have the right to choose, for example, a management company and even re-create a partnership.
The legislation does not establish any temporary or procedural specifics for establishing an association. An exception may be a situation where the registration of a new HOA is prohibited by the court due to the fact that the debt of the residents to the partnership led to bankruptcy.
It is important to note that all consequences for owners are only procedural in nature.
Judicial practice on declaring a partnership insolvent
In judicial practice, bankruptcy of HOAs is quite rare. An analysis of the cases examined allows us to conclude that most often the association becomes insolvent due to the dishonesty of the residents themselves, who accumulate large debts on utility bills.
For example, a house with heating debts becomes a potential candidate for bankruptcy, since the unpaid amount is constantly increasing due to penalties and fines.
When making a decision on the insolvency of an HOA, the court analyzes the financial condition of the association.
Expert opinion
Novikov Konstantin Yakovlevich
Lawyer with 8 years of experience. Specialization: family law. Extensive experience in protecting legal interests.
The judge may conclude that due to the lack of sufficient material resources, property and solvency, the activities of the partnership cannot be restored.
Judicial practice regarding the bankruptcy of HOAs in 2021 shows that the claims of creditors are recognized as extinguished on the basis of clause 9 of Art. 142 of the Federal Law of the Russian Federation “On Insolvency (Bankruptcy) dated October 26, 2002 No. 127-FZ.
Please note that the party that initiated the procedure must pay court costs. This also applies to payment for the services of an arbitration manager.
How to pay for utilities correctly
Current utility bills are calculated regularly, regardless of the financial situation of the owner (tenant) of the property. During the period of bankruptcy proceedings (and it can last quite a long time, up to a year), the debt will grow due to current accruals (penalties and fines are not calculated during this period).
Until a court decision, no one has the right to release a citizen from fulfilling his obligations. To settle the amount of housing and communal services debts in bankruptcy, you must:
- make an appointment with your boss;
- write an application requesting to write off the debt, including fines and penalties;
- offer to draw up a payment schedule for current services with a fixed amount or on other acceptable terms.
These actions are of great importance for maintaining normal living conditions, since management companies have the ability to shut off water and sewerage, as well as the supply of electricity. At the same time, no one will understand bankruptcy litigation until a court ruling on debt relief has been issued.
No matter how the circumstances develop, it is necessary to make contact with representatives of the organization providing housing and communal services. Make account reconciliations, visit the cash desk of the payment center if you find errors in the receipt after concluding an agreement to pay the current debt!
IMPORTANT! The debt of an individual can only be relevant for the last three years, if the resource supplying organization did not send notifications about the amount of debt with a statute of limitations period of more than three years, and also if the citizen did not sign reconciliation acts. This fact must be kept in mind, although in practice such cases are rarely recorded. Management companies regularly send registered letters with demands to repay the debt, enclosing a breakdown of the debt by month.
Thus, before making any decisions in favor of the debtor, HOA employees will conduct a thorough analysis of business correspondence and interactions with a citizen on debt issues. The only thing you shouldn't think about is whether utility debts are discharged in bankruptcy. It is important to remember that ongoing obligations will always exist and paying for the services consumed is the responsibility of every citizen.
Bankruptcy of HOA: reasons and circumstances
According to the current legislative provisions, in its form and structure, an HOA is equivalent to a legal entity, and therefore the bankruptcy procedure has characteristic features that are applicable to similar structures.
Often, HOAs may find themselves in bankruptcy mode for the following reasons:
- A problem arises with the increase in debt of individual HOA participants to utility companies. Almost every building has tenants who, for one reason or another, do not pay their bills, and the increase in the amount of debt can lead to the fact that sooner or later bankruptcy proceedings will be initiated against the community.
- In some situations, liquidation may occur due to misappropriation of funds. In essence, the residents of the house transfer their funds to the accounts of the partnership, which redirects them to the final recipient - the utility organization. And if it is revealed that despite 100% payment from residents, the money never reached the utility companies, then the HOA may be subject to bankruptcy by court decision.
It is worth noting that all the reasons for the bankruptcy of an HOA are somehow related to finances, as are the reasons for the bankruptcy of an individual entrepreneur. Therefore, it is extremely important, if you are a member of such a company, to monitor the situation and regularly request reports.
In general, HOAs are considered a kind of buffer between the inhabitants of the building and utility organizations. But as soon as difficulties arise, the state provides protection to the latter, and not to its citizens.
There are often situations when, due to the accumulation of debt obligations of the HOA and the subsequent liquidation of the society, all payment obligations are transferred to the residents. And there is no clear regulated system that would provide guaranteed protection to bona fide property owners; in any case, a claim for debt collection with accrued fines and penalties may be filed against them.
Art. 312 of the Civil Code of the Russian Federation directly indicates that even in the absence of up-to-date information on the use of HOA funds, residents of the house cannot be exempted from re-payment if necessary.
It is precisely due to this circumstance that society has a rather skeptical attitude towards HOAs, since bankruptcy can occur at any time, just like the bankruptcy of legal entities . And the bankruptcy of an HOA may entail additional costs on the part of its members.
Who is a member of the SNT
07.07.2021
Membership dues funds go towards salaries of the partnership’s employees, payment for general utilities, for example, lighting on the territory of the partnership (it does not take into account whether there is lighting on the SNT member’s property), and for operating expenses. The size of the membership fee depends on the number of plots occupied. The size of the share contribution is equal to the amount of 5 membership fees.
What is SNT? The abbreviation is deciphered as follows: “horticultural non-profit partnership.” In simpler terms, SNT are voluntary associations of gardeners, created so that people can jointly resolve all issues relating to their land plots, and thereby make their gardening activities easier and simpler.
In other words, these partnerships are needed to manage the land legally. Members of gardening partnerships can plant trees on their plots, plant vegetable gardens, and engage in any economic activity, if it does not violate the charter adopted by the partnership.
In addition, it is allowed to build a house in SNT and all kinds of outbuildings. There are many people who live temporarily (for example, in the summer) or permanently in their garden plots, and the houses they build look good and are quite livable.
You can even register in them, but for this, both the house and the plot must be registered as private property, and the house must be recognized as suitable for habitation.
Do new dacha owners automatically become members of SNT?
The deadlines for paying contributions and taxes must be clearly stated in the charter of your SNT, you can familiarize yourself with it as soon as you wish. Payment of membership, target, additional contributions, tax and other fees is the responsibility of the member of the dacha partnership.
People running gardens individually are required to pay a fee for the use of the general infrastructure of the gardening partnership on the basis of agreements concluded with the board. The procedure for concluding such agreements is also determined by the SNT charter.
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1. I was a member of SNT, entered into an agreement, but did not write an application to leave SNT. Does my daughter automatically become a member of the gardening partnership? 2. Does my daughter have any tax benefits if she is a young pensioner? 3. Should she pay dues and taxes now? We usually paid them in May.
4. Should she separately pay for garbage removal and road repairs or does money from membership fees go towards these purposes?
A deceased member of the SNT will be considered a member until the board receives a death certificate of the SNT member. It is enough to simply show the document to a relative so that the secretary can make a mark on the list of SNT members. In this case, the general meeting does not need to expel a member of the SNT due to death.
The basis for such a simple solution to the issue of exclusion is the norm of Article 17 of the Civil Code of the Russian Federation (see below).
And the peculiarity of this case is that an official document (a copy of the death certificate or, at least, details of such a certificate) must be attached to the exclusion mark, because the neighbor’s words cannot be attached to the protocol.
“Is it possible not to accept a harmful gardener as a member of SNT ?” - a question may arise. The meeting, of course, can make any decision. But a harmful gardener has the right to go to court for such disrespect for his precious person.
In the claim, he will indicate that he wants to join SNT, has undertaken to pay fees, fulfill the requirements of the company’s charter, is the owner of a land plot, etc. (see sample application for membership in SNT). Finally, referring to Articles 18 and 46 of Law No. 66-FZ, he will demand that SNT be obliged to accept him as a member of SNT.
Believe me, he will win the trial, and the right to be a member of the SNT will be restored. The court will not take personal likes and dislikes into account. This is all poetry, not legal norms.
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Membership in SNT: procedure for obtaining membership, who can be a member
It is also necessary to say what the land included in the gardening partnership is, and what specific areas may be included there. The whole point is that each partnership can be divided into several categories, taking into account the property that is their property. In this case, we mean areas that are used by SNT members.
Important! Since SNT is a legal entity, it must have a complete set of statutory documentation. For example, the charter of the partnership itself and tax certificates. The charter reflects the process of transferring plots of land to owners, as well as the conditions for their operation.
SNT No. 5 - OJSC gas
2. Expulsion of old members from SNT. Now that we have dealt with the new members of the SNT, let’s take a closer look at the old ones. You don’t have to look far for examples. The land plot went to my wife under a gift agreement duly registered with a notary.
On this basis, the wife submitted documents to the department of Rosnedvizhimost in the Nizhny Novgorod region and received a certificate of ownership of the plot. We have already figured out above that until she has submitted an application to become a member of SNT, until the general meeting has accepted her as a member, she is not one. Everything is clear here.
Membership in a public organization cannot be inherited from one member to another.
Despite the apparent simplicity and unambiguous understanding of this issue by all gardeners: members of SNT and non-members (carrying out individual gardening activities), the concept of membership in a gardening non-profit association of citizens requires a more in-depth analysis.
Who is a member of the SNT Link to main publication
HOA bankruptcy procedure
In accordance with current regulations governing issues regarding HOAs, bankruptcy will occur in accordance with all the rules established for legal entities. But even here there are some peculiarities.
According to the law, bankruptcy of an HOA can be initiated:
- The HOA can independently apply to arbitration to start bankruptcy proceedings.
- Bankruptcy can be triggered by an appeal from a company providing services and to which the debt arose.
- Also, the Federal Tax Service may intervene in the process as a representative of creditors and start a procedure such as bankruptcy.
Complications may arise due to financial insolvency, that is, when the company has stopped transferring money to housing and utility providers. At the moment, there is a rule according to which a trial can begin if the following conditions are met:
- The total debt amount exceeded 100 thousand rubles.
- Payments stopped arriving for 3 months.
- The partnership refuses to fulfill its obligations and does not recognize the punitive measures imposed by the creditor.
After the court accepts the statement of claim, it introduces the standard bankruptcy procedure for the HOA as a legal entity. That is, all stages provided for by law must be implemented, and based on their results, the final verdict will be rendered. Here you can read about the bankruptcy of credit institutions .
Homeowners association bankruptcy: whose side is the law on?
Despite the fact that the key responsibility of the state is to protect its subjects, in the case of bankruptcy, a radically opposite picture can be observed. Often, the debts of an HOA are repaid at the expense of all its members, be it a bona fide payer or a malicious debtor.
And there are no mechanisms in place to provide protection to consumers.
However, in fairness, it is necessary to emphasize that most of such associations are inherently untenable. However, their liquidation does not occur due to the lack of interest in this issue from housing and communal services suppliers. Throughout the country, one can count isolated cases of recognition of the insolvency of intermediary structures.
It should also be noted that bankruptcy is not as simple a situation as it seems at first glance. Our legal system has a lot of conflicts, and this issue was no exception. There are several norms that contradict each other. In particular, paragraph 6 of Art. 135 of the RF Housing Code states that residents are not responsible for the HOA and vice versa.
And at the same time Art. 312 of the Civil Code of the Russian Federation makes it clear that in the event of financial problems and subsequent bankruptcy, debts will be collected from tenants, even if they made timely payments.
So we can say with confidence that when looking for a solution to this conflict, everything will depend on the judge who is considering the process. He can either recognize the right of public utilities to receive compensation from residents, or appoint a manager who will work with debtors.
Author of the article: Petr Romanovsky, lawyer Work experience 15 years, specialization - housing disputes, family, inheritance, land, criminal cases.
Useful information on bankruptcy
- Bankruptcy of individuals
- Initiation of bankruptcy proceedings
- Intentional and fictitious bankruptcy
- Bankruptcy of an individual entrepreneur
- Bankruptcy of credit institutions
- Debtor bankruptcy procedure
- Bankruptcy of the developer during shared-equity construction
- Bankruptcy supervision
- Bankruptcy procedure
- Bankruptcy LLC
- Company bankruptcy
- Bankruptcy of tour operators
- Homeowners association bankruptcy
- Insurance company bankruptcy
- Bankruptcy of SNT
- Stages of bankruptcy
- Subsidiary liability in bankruptcy
- Bank bankruptcy procedure
- Current payments in bankruptcy
- Bankruptcy of legal entities
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The HOA is a non-profit organization and previously could not participate in bankruptcy proceedings. But after amendments were made to Art. 65. The Civil Code of the Russian Federation made this possible.
In accordance with the article, bankruptcy proceedings may be introduced in relation to any legal entity (with the exception of certain categories of enterprises). An HOA is a legal entity, therefore, it can be recognized as an insolvent organization. Let's consider the features of bankruptcy of a partnership and the nuances of the judicial procedure.
Dear readers! Our articles talk about typical ways to resolve legal issues, but each case is unique.
Bankruptcy of a homeowners association (description of the procedure for dummies)
In the realities of the modern legal field, with the adoption of the new Housing Code (LC RF), we can say that the legislator has regulated the community of residents of an apartment building, describing it in part VI of the code, called “HOA”. Adopted on December 22, 2004, the Housing Code of the Russian Federation went through a good run-in of law enforcement and various excesses and, in my opinion, interesting cases began to appear. One of them is the bankruptcy of the HOA, i.e. declaring him insolvent and, accordingly, writing off all debts from him, including debts for housing and communal services. This is exactly what I would like to talk about today. So what is the procedure itself?
In Art. 2, the current version of the Federal Law “ON INSOLVENCY (BANKRUPTCY)”, adopted by the State Duma on September 27, 2002, with a number of amendments and additions, states that:
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 and (or) to fulfill the obligation to make mandatory payments;
The bankruptcy procedure begins by decision of the arbitration court, if the legal entity (which is the HOA) is unable to find funds to pay off debts to creditors (for example, a large debt to housing and communal services). The application is submitted either by one of the creditors who has legally established reasons (given in the law), or by the bankrupt enterprise itself.
What happens when an HOA goes bankrupt?
The court, having accepted the application for consideration, may delay declaring the HOA bankrupt and introduce, by its definition, procedures aimed at restoring the debtor’s solvency (Article 27 of the Bankruptcy Law provides for the following procedures: supervision, financial recovery, external management, bankruptcy proceedings, settlement agreement). Thus, the HOA often undergoes an observation procedure, during which the temporary manager analyzes the financial condition, identifies creditors and holds their first meeting. At the end of the observation, the manager submits to the court a report on his activities, information about the financial position of the HOA and his proposals on the possibility or impossibility of restoring the debtor’s solvency (Article 67 of the Bankruptcy Law). After the expiration of the period provided for by the bankruptcy procedure, if the financial condition of the debtor - the HOA still leaves much to be desired, the partnership is declared bankrupt and bankruptcy proceedings are introduced for a period of 1 year, the purpose of which is to proportionately satisfy the claims of creditors. At the same time, creditors elect a self-regulatory organization of insolvency practitioners, upon whose proposal the court appoints an insolvency insolvency practitioner and sets the amount of his remuneration, which cannot be lower than 10,000 rubles (now 30,000 rubles). Practice shows that in cases of bankruptcy of HOAs, the remuneration is set equal to the minimum limit. The court, when making a decision to declare the HOA bankrupt, examines the financial condition of the debtor and most often draws a conclusion that “wanders” from one decision on the bankruptcy of the HOA to another: the organization has no equity capital and completely no property, therefore restoring solvency and carrying out activities is impossible ( decisions of the Arbitration Court of the Rostov Region dated 02.21.2008 No. A53-10385/2007-C1-31, Arbitration Court of the Krasnodar Territory dated 03.03.2008 No. A32-27523/06-38/2754-B, Arbitration Court of the Belgorod Region dated 08.08.2008 No. A08-758/08-31B).
It makes sense to figure out what is “equity capital”, the property of the HOA. First of all, let us turn to the Civil Code, in Art. 213 of which is enshrined, citizens and legal entities can own any property, with the exception of certain types of property that, in accordance with the law, cannot belong to citizens or legal entities. The quantity and value of property owned by citizens and legal entities are not limited, with the exception of cases provided for by law. The question arises: which of the above does the HOA have? We find the answer in Art. 151 of the Housing Code of the Russian Federation: The HOA may own movable property, as well as real estate located inside or outside the apartment building. As experience shows, it is extremely rare for a partnership to own real estate, since the HOA, being an ordinary subject of civil transactions, can acquire real estate only on the basis of a transaction (donation, purchase and sale, assignment of the right of claim). In other words, the HOA must either have enough money to buy real estate, or there must be a well-wisher who will donate such property. Let us remind you that the common property of an apartment building, which includes the roof, facade, basements, and land plot under the house, belongs by right of common shared ownership to the apartment owners, and not to the HOA. Meanwhile, the experience of the Nizhny Novgorod HOA Association shows that the majority of “ordinary” HOA members consider the common property of an apartment building not theirs at all, but the property of the partnership. This misconception often leads to concerns about the consequences of an HOA bankruptcy in the form of foreclosure on part of their home, such as the attic or basement. Such fear is also unfounded because clause 6 of Art. 135 of the Housing Code of the Russian Federation establishes a rule according to which the HOA is not liable for the obligations of the members of the partnership, and the members of the HOA are not liable for the obligations of the partnership. Please note: The Bankruptcy Law provides for the possibility of so-called pre-trial rehabilitation (Article 31). HOA members can provide the partnership with financial assistance in an amount sufficient to pay off monetary obligations and mandatory payments and restore solvency. This measure is voluntary, and financial assistance can come from all members of the HOA, from one of them, or from an outsider. In fact, the property of the partnership most often consists of office equipment, inventory, and funds in accounts. It is this property that is foreclosed upon if the HOA is declared bankrupt; it is this property that becomes the bankruptcy estate. It will cover, out of turn, legal costs and expenses for paying remuneration to the arbitration manager. But even if the HOA funds are not enough to cover these expenses, the property of the HOA members will still not be damaged. Further, the satisfaction of creditors' claims occurs in the manner provided for in paragraph 4 of Art. 134 of the Bankruptcy Law. Claims of creditors that are not satisfied due to the insufficiency of the debtor's property are considered extinguished (Clause 9 of Article 142 of the Bankruptcy Law). Let us add that clause 3 of Art. 59 of the Bankruptcy Law provides that if the debtor’s funds are insufficient to cover legal expenses (state fees, publication of mandatory information, remuneration to the insolvency administrator, services of experts hired by the insolvency administrator), the person who initiated the bankruptcy must pay them. So, for example, in the case considered by the Nineteenth Arbitration Court of Appeal in Resolution No. A14-27093/2005/32/27b dated January 23, 2008, 165,000 rubles were recovered from the resource supply organization. in favor of the arbitration manager.
After the HOA is declared bankrupt, it is liquidated, which means that the owners of the apartment building premises need to choose a new management method at a general meeting. By the way, nothing prevents them from again choosing management through an HOA and creating a new partnership. In this regard, the question arises about the possibility of abuse on the part of property owners: accumulating debts, then “bankrupting” the HOA and creating a new one, without paying for the maintenance of housing and utilities. Here you can upset the “resourceful” owners with the following: the court and the arbitration manager check the fictitiousness and intentionality of bankruptcy. If such signs are established, the court, in accordance with Art. 55 of the Bankruptcy Law makes a decision to refuse to declare bankrupt. In addition, the court, having discovered that the debts have never been collected from the owners, will order any bankruptcy procedure of its choice, during which the arbitration manager will begin collecting debts from defaulters and will certainly not miss the opportunity to collect penalties in accordance with the Housing Code .
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The main text of the article was taken here: https://www.zahvat.ru/show/forum/bankrotstvo-tszh/ Original: Article by M.A. Chistyakova. Bankruptcy of HOAs" for the magazine "Housing and communal services: accounting and taxation" No. 9, 2008.
What it is?
Bankruptcy is a legal procedure aimed at collecting funds from a company in order to fulfill financial obligations to creditors. If the HOA cannot repay debts to organizations and individuals, then the measures provided for by Federal Law No. 127 “On Insolvency” are applied to it.
The purpose of the procedure is to restore the solvency of the partnership and make payments to creditors. The procedure can be carried out voluntarily or compulsorily.
- Voluntary bankruptcy is carried out at the initiative of the board. The chairman independently files a statement of claim to declare the partnership insolvent. This bankruptcy option is more preferable, as it makes it possible to independently choose an arbitration manager, as well as avoid subsidiary liability.
Since it is impossible to liquidate a legal entity with debts, the chairman has no choice but to go to court with a bankruptcy petition.
- Involuntary bankruptcy is a process initiated by a creditor. The application for declaring the HOA bankrupt in this case is submitted by the resource supply company, employees of the partnership and other organizations and persons to whom the management organization has a debt.
Federal Law No. 127, Article 9, clause 1 obliges a legal entity to independently file an application with the court to declare the organization insolvent if the property and funds of the enterprise are not enough to pay debts to all creditors, and collection will lead to the impossibility of further business.
Causes
the reasons for this ?
Based on judicial practice, this is:
- unscrupulous tenants who do not make payments for a long time;
- penalties and debt growth;
- illiteracy in managing the organization and spending funds;
- unjust enrichment.
Read on our website about how and where to complain about the HOA or leave it.
Declaring the partnership insolvent
The Insolvency Law (Article 33) provides for certain conditions under which bankruptcy proceedings can be carried out against a legal entity:
- the debt of the homeowners association is at least 400 thousand rubles;
- failure to fulfill creditor claims within three months.
Article 33 of Federal Law No. 127. Jurisdiction and jurisdiction of bankruptcy cases
In the case of HOAs, the procedure is most often introduced for the following reasons:
- Fraudulent actions on the part of the chairman. Since HOA debts most often arise to resource supply companies, the cause of bankruptcy may be a delay in payment for services under the contract. Apartment owners can pay bills in good faith, but the organization itself can direct them not to pay for electricity, gas and water, but for other purposes, most often not related to home maintenance.
- Debt for housing and communal services of apartment owners. If a large percentage of residents do not pay for services, then the partnership will have to answer for this. The HOA is a non-profit organization, and, therefore, it does not have any profit that could be used to pay off debts for unscrupulous owners.
That is why governing bodies often take quite stringent measures to collect debts from residents. Indeed, in case of non-payment, the partnership may be liquidated and declared bankrupt.
It should be noted that the introduction of a procedure in relation to an HOA may not ultimately lead to its closure. In this case, the HOA will not receive “bankrupt” status.
This may happen if the partnership enters into a settlement agreement with the creditor or is able to pay debts in full and restore solvency during the initial stages of the lawsuit.
How does the procedure work?
Expert opinion
Novikov Konstantin Yakovlevich
Lawyer with 8 years of experience. Specialization: family law. Extensive experience in protecting legal interests.
The trial takes place in several stages. Their number and timing depend on many factors: the amount of debt, the number of creditors, the circumstances of the case, the presence or absence of property in the HOA.
Observation
The purpose of this stage is to analyze the financial condition of the partnership. The procedure is carried out by a temporary manager who takes over management functions. The chairman and board are removed from management. At the same stage, the number of creditors is determined.
Data on the beginning of legal proceedings are published in the printed publication Vestnik. Within 2 months, organizations and persons to whom the HOA has debts can go to court to be included in the register of creditors and fulfill financial requirements.
If the manager finds out that the chairman intentionally concluded contracts for the supply of services or other agreements that obviously led the HOA to bankruptcy, then these transactions will be canceled, and the amount of the transactions will subsequently be included in the bankruptcy estate. Based on the results of the work of the temporary manager, a decision is made:
- take measures to restore solvency;
- continue further bankruptcy proceedings with subsequent liquidation of the partnership.
Financial recovery
If, during an assessment of the financial situation, it turns out that the HOA is able to restore solvency and gradually pay off its debts, then a rehabilitation procedure is introduced in relation to it. At this stage, the manager takes measures to ensure that the HOA continues to function while satisfying the demands of creditors.
One of the measures taken is the collection of debts from the residents of the house.
External control
At this stage, the manager assumes full responsibility for the activities of the HOA. He draws up a plan for the further management of the partnership, which is approved by the court.
As a rule, in the event of bankruptcy of a partnership, the recovery and management stages are used in rare cases. After the observation stage, bankruptcy proceedings are introduced.
How is the bankruptcy procedure carried out?
Bankruptcy of an HOA can be initiated either by companies that do not receive their funds on time for services provided, or by the HOA itself in cases where such a situation is obvious.
If the HOA has accumulated debt in the amount of 100 thousand rubles. and above, and there are no payments on the debt within 3 months, this situation is the basis for initiating the declaration of bankruptcy of this HOA.
The HOA can independently apply to the arbitration court to declare itself bankrupt. Moreover, this step is mandatory when there are circumstances leading to bankruptcy, the inability to fulfill their payment obligations to creditors or providers of various services.
a creditor can apply to the arbitration court in order to declare the debtor bankrupt. In this case, according to the procedure, you first need to obtain a document stating that the corresponding writ of execution has been sent to the bailiff service and 30 days have passed from that moment, and the funds have not been received from the debtor.
The court, after considering the submitted applications and the accompanying evidence, in most cases allows the HOA to pay off its debts, that is, the recognition of bankruptcy is postponed for a certain period, during which measures are taken to save the financial situation of the HOA.
An assessment is carried out , identification of creditors and work with them, work with debtors, a reorganization procedure (tenants “help” the HOA get out of difficulties by paying debts). This set of measures is called the “observation procedure”.
The property of the HOA can also serve as a source of debt repayment Usually there is office equipment, inventory, and funds in accounts that can serve as debt repayment. in common use : attics, basements, etc. cannot be “taken away” for the debts of the HOA. Like the facades of the building, its roof and the surrounding area, these premises belong equally to all residents of the house, and not to the HOA.
If, after the observation period, the financial situation of the HOA is such that repayment of debt obligations is impossible , the HOA is declared bankrupt and liquidated using standard means of liquidating a legal entity.
Next, the residents of the house must choose a new control method . This could very well be a new HOA.
