The Federal Law on Insolvency (Bankruptcy) regulates the actions that can be taken with respect to financially insolvent persons or organizations. It gives a clear definition of bankruptcy, indicates possible actors and their powers. The details of the procedure and the measures carried out within its framework are also described, the terms and other conditions are determined, additional regulatory documents are indicated.
The law on insolvency (bankruptcy) exists in order to exclude unlawful actions against debtors or other persons associated with the procedure in question. In addition, it provides for various activities designed to restore the solvency of bankrupt. That is, it retains the opportunity for them not only to fulfill debt obligations, but also to return to normal activities in the future.
What it is
Federal Law on Insolvency (Bankruptcy) defines Bankruptcy
as an inability to fulfill debt obligations. Regarding individuals, it implies a complete inability when even the sale of all the property of the debtor cannot solve the problem, since its total value is lower than the amount owed.
Regarding legal entities, non-compliance is implied monetary obligations occurred (at the time of review) for three months (or more). In this case, debt (monetary) obligations mean not only the repayment of various loans, but also the implementation of mandatory state payments: taxes, fees and duties. Also fines, if the reason for their imposition was not related to the procedure.
Who could be bankrupt
The conditions on the basis of which bankruptcy can be recognized are stipulated by the Federal Law (Law on Insolvency (Bankruptcy)). The insolvency threshold and the deadlines after which the procedure can be started are indicated. A citizen or company (organization) may be declared insolvent.
The conditions for declaring insolvency and conducting the procedure may vary. For example: the bankruptcy threshold for an individual entrepreneur is lower than for an agricultural organization. The highest federal law threshold (insolvency law) defines strategic importance for enterprises.
The implementation of proceedings in relation to a citizen will also differ from a similar process in relation to an organization. In relation to citizens, no financial recovery measures are taken. The grounds for applying in both cases are different.
Legal entities (organizations)
With regard to legal entities, insolvency law states the following: a legal entity that does not comply with the requirements of creditors (or the state, which is provided for in cases of non-payment of mandatory payments) for three months or a longer period, is declared insolvent. But only if the total debt exceeds the threshold that determines the Federal Law (127, insolvency law).
Now the bankruptcy threshold for legal entities is 300,000 rubles. An exception is agricultural organizations: a threshold of half a million rubles has been set for them. Strategic enterprises may be declared bankrupt if their total debt exceeds one million rubles.
Individuals (citizens)
Regarding individuals, the insolvency law states the following: insolvent is a citizen who is unable to fully satisfy the requirements of the creditor. The amount owed must exceed a threshold of half a million rubles.
If we are talking about obligations to two or more creditors, the amount of debt in each case is considered separately. For example: if a citizen owes two (or more) creditors 450,000 rubles each, he cannot be declared bankrupt. But if the debt to at least one of the creditors exceeds half a million rubles, the procedure is initiated.
The Insolvency Law (127-FZ) will begin to regulate the production processes (bankruptcy proceedings), initiated in relation to individuals, from July 1, 2015. Whether this will be justified is still unknown. Corresponding changes to the insolvency law were introduced in 2014 and signed by the president.
Procedure
Bankruptcy Procedure - a set of measures taken with respect to the debtor. The main regulatory document is the Insolvency Law (127-FZ). The beginning of the procedure is the filing of an appropriate application with the arbitration court. If we are talking about the bankruptcy of a citizen (individual) who did not carry out entrepreneurial activity, the application should be considered by a court of general jurisdiction. Voluntary declaration of bankruptcy is possible (the debtor submits an application himself).
You should be aware that bankruptcy is not a way to get rid of obligations. This is an emergency measure of their implementation. In addition, there is a set of rehabilitation measures aimed at restoring the solvency of an insolvent person. However, fictitious or deliberate recognition of insolvency is punishable. During production, appropriate checks may be carried out.
Key Definitions
In addition to fairly simple definitions (debtor, creditor, monetary obligations, etc.), the law on insolvency (bankruptcy) operates with some more complex ones. It is important to correctly understand their meaning - this will help to avoid various errors, to control the course of the procedure and the legitimacy of the actions of certain individuals independently.
- Observation: the financial condition of the debtor is analyzed to correctly determine the requirements for it; also controls the safety of the property of the debtor.
- Bankruptcy proceedings: proportional distribution of bankrupt assets and property among all its creditors.
- Federal standards: defined by relevant regulatory documents, regulate the activities of arbitration managers.
- Amicable agreement: means the termination of the proceedings, concluded at any time between the creditors and the debtor (if a compromise is reached).
Members
The Insolvency Law determines the possible participants in the bankruptcy procedure and regulates their activities. Each of them becomes a participant in the procedure under certain conditions and has the rights and obligations established by law. All this should be known in case of the need to protect their own interests.
- The head of the debtor enterprise - without issuing a power of attorney, can act on behalf of the company (only in matters relating to the procedure, without violating federal law).
- Supervisory authority, task - control the activities of organizations of arbitration managers; authorized by the government of the Russian Federation.
- Representative of the committee of creditors - takes part in the arbitration process, authorized by the committee of creditors.
- Arbitration manager - employee of the organization of arbitration managers; during the procedure, the organization appoints the post of temporary, competitive, external or administrative manager.
- Interim manager - appointed at the stage of observation, is responsible for the activities carried out as part of the stage.
- Administrative manager - is responsible for the financial recovery of the debtor.
- External manager - at the stage of external management, replaces the head of the debtor enterprise (who is removed at this stage) and has all his powers.
- Bankruptcy trustee - is responsible for the implementation of bankruptcy proceedings.
Regulatory documents
First of all, the insolvency law governs the procedure. In addition to it, bankruptcy proceedings may be regulated by relevant government decrees. For example: in the case of a check for signs of false (fictitious) or intentional bankruptcy. And also if the state acts as a creditor.
The same applies to measures for financial recovery and the activities of arbitration managers: there are relevant resolutions for their regulation. But they only supplement the insolvency law, without contradicting it. International agreements may also be regulatory documents (where required).
Rehabilitation measures
Bankruptcy proceedings may include rehabilitation measures (except in cases in which their implementation is impossible). Their purpose is to restore the solvency of the debtor, so that he can fully satisfy the requirements of creditors. In some cases, they can prevent bankruptcy and preserve the possibility of rebirth and development in the future.
Rehabilitation measures are regulated by the insolvency law and relevant regulations (if provided). They are conducted by external or administrative managers appointed by the self-governing organization arbitration managers. In some cases, by other persons, in accordance with the law. The initiator of the event may be any of the parties.
Financial recovery of legal entities
Activities for the financial recovery of legal entities are carried out by authorized persons. Any of the parties (in the established manner) may petition for their conduct. The details of such events depend on many aspects of the situation. From the actions of the debtor himself - including.
- Remediation: measures to prevent bankruptcy and restore solvency (can be taken by both an external manager and other authorized persons).
- External management: management authority is transferred to the external manager, with the removal of existing management.
In the framework of rehabilitation or external management, inefficient production facilities may be closed, and the structure of the company or enterprise may be optimized. More effective money management schemes may begin. The literacy of financial recovery actions allows us to achieve not only the full satisfaction of the requirements of creditors, but also the preservation of the business.
Financial recovery of individuals
Concerning individuals, the usual financial recovery procedures are not possible. However, debt restructuring measures may be taken. They can create an acceptable debt repayment plan for the debtor and help avoid insolvency. As well as the sale of property of the debtor, which will be inevitable in the event of bankruptcy.
