Bankruptcy
Insolvency, or, in other words, bankruptcy, is court determined and affirmed inability of the corporation or individual entrepreneur to cover his/her liabilities and debts. In Russian legislation, bankruptcy and insolvency have identical meaning.
According to the Bankruptcy law, the lender could be either an individual or a corporation.
Bankruptcy is the only legal means of terminating business activity of an insolvent corporation, as well as pay fully or partially with the creditors.
Bankruptcy is often used for fraudulent purposes by debtors, creditors and even third parties to the bankruptcy - directors, or managers of the indebted company, arbitrally appointed executor or others.
The Federal Law on Bankruptcy states that bankruptcy can be declared by corporations, individual entrepreneurs and individuals; however, currently the insolvency laws are not applicable to the individuals.
In order for the bankruptcy claim by creditor to be accepted in arbitrary court the following two conditions must be met:
- Debt must be confirmed by the court order;
- Debt is no less than 100 000 rubles.
The recent changes to the Bankruptcy Law granted the arbitrary executor the right to question, so called, “questionable deals”. Also, now the bankruptcy procedure is more detailed for individuals (directors, managers, staff, and third parties that have a right to give mandatory orders, to solidarity liability for the debts of the debtor. Now the creditors are better protected against fraudulent bankruptcies and the arbitrary executor can advise the police about the suspected fraudulent bankruptcy.
The law defines the following stages of bankruptcy: monitoring, financial restructuring, external management, bankruptcy proceedings, peace agreement. Each of the stages differs in a set of rights and liabilities of each party to bankruptcy, as well as the ultimate goal of each procedure.
Bankruptcies are always reviewed by the local court (where the debtor is located).
At Legal centre INDEPENDENCE, our lawyers and legal specialists have extensive expertise in bankruptcies and will provide professional assistance in questions of bankruptcy and bankruptcy protection in your geographic region.