In the event of improper functioning, often as a last resort, management decides to liquidate the legal entity. By liquidation, it is necessary to understand the guaranteed method of terminating legal entities. In addition, under such circumstances, there is no right to transfer the corresponding rights of a subjective nature and certain duties to other persons. This article discusses the concept, types and procedures for the liquidation of a legal entity. In addition, in the process of reading the material, you can find answers to a number of popular questions today that will help determine this concept.
Liquidation of legal entities: concept, grounds, types
According to the first paragraph of Article 61 of the Civil Code of the Russian Federation, liquidation is characterized as termination of a legal entity, provided there is no succession in relation to its rights and obligations. In accordance with the law, the liquidation of legal entities is possible in two cases:
- On a voluntary basis.
- Forced (e.g. tax liquidation of a legal entity).
In the first case, liquidation takes place due to the relevant decision of the founders (participants) of the legal entity. In addition, the procedure is possible under the influence of the authorized body through the constituent documentation of the legal entity. By the way, often the second case manifests itself in practice precisely when the formation of this structure expires. What does it mean? A legal entity may be liquidated when the goal for which it was organized has already been achieved.
Forced liquidation
The second case is possible only by decision of the relevant judicial authorities, when the following grounds for liquidation of a legal entity are relevant:
- The assumption in the process of formation of legal entities of gross violations of applicable law. It is important to add that everything is not so scary if these shortcomings are to be eliminated. If it is impossible to get rid of them, then the court decision will be categorical.
- The implementation of a certain type of activity without a license (special permit) may also cause liquidation.
- The implementation of activities that are strictly prohibited by state law.
- The relevance of other gross violations manifested repeatedly and related to the law or individual legal acts.
- Systematic development by public or religious associations (organizations), charitable or other foundations of activities that, one way or another, contradicts their statutory goals and principles.
- The presence of other cases stipulated by the Civil Code of the Russian Federation.
It is important to add that the concept, types and procedure for the liquidation of a legal entity require the submission of a corresponding demand to the judicial authorities by a state structure or a specific local government body by force. By the way, with respect to the latter, the right to present this requirement must be provided through legislation (for example, by the body against monopoly).
Procedure for Liquidation Procedure
In this chapter, it would be advisable to consider the procedure for liquidation of a legal entity, relevant to date. You need to know that the corresponding procedure includes a number of stages, among which the following stand out:
- The first stage, involving mandatory communication by the founders (participants) of the legal entity or the body that made the decision on the appointment of the liquidation operation, in the direction of the authorized state body, written in writing (by the way, all types of liquidation of the legal entity begin with this point). This step is necessary for entering information on the stay of the structure in the liquidation process into the unified register of the state jurisdiction. So, the participants (founders) or the body that made the final decision on the liquidation procedure, form the terms and procedure for liquidation, as well as establish the persons of the liquidation commission. It is after the selection of the liquidator that all powers in relation to the affairs of the structure go directly to him. In addition, he has the right to speak before the judiciary in the person of a legal entity subject to liquidation.
- The second stage, in accordance with which all types of liquidation of a legal entity take place, involves the commission placing the relevant publication in the publishing bodies. It is important to add that the information should not only relate directly to the fact of liquidation, but also its order, as well as the timing of the submission of creditors' claims. By the way, this period should exceed two months if you count from the time of publication. So, the commission undertakes to take some measures in order to identify creditors and, accordingly, to receive debts. In addition, it must notify the creditors in writing directly of the liquidation of the structure. Then, when the deadline expires, the liquidator forms an interim balance in order to present claims by creditors. This document, as a rule, contains information on the composition of the property complex, which is subject to liquidation, as well as a list of creditors' claims and results with their familiarization. In turn, the interim balance is approved by the participants (founders) or the body that made the decision to carry out the appropriate procedure. The final step of the second stage is the approval of the balance in agreement with the authorized public authority.
Subsequent Procedure Steps
As it turned out, the concept and types of liquidation of a legal entity correlate with some stages of the procedure:
- The third stage involves the implementation by the liquidation commission of the sale of property complexes, previously owned by a legal entity, in accordance with the conditions of the public type of bidding. It takes place in case of insufficient funds to satisfy all existing creditor claims. It is also important to add that the implementation of this stage does not apply to institutions that respond exclusively in cash. Thus, owners of property complexes bear the subsidiary liability for the obligations thereof.
- The fourth stage, which is associated with all types of liquidation of a legal entity, is the payment of a certain amount of cash in relation to all available creditors of the liquidated structure. This stage is carried out through the efforts of the appropriate commission. In addition, there is a priority order established by 64 articles of the Civil Code of the Russian Federation.
Priority Payments
As noted above, all types of liquidation of a legal entity are correlated with a number of stages, the fourth of which involves some priority in relation to payments:
- Initially, civil requirements (individuals) are satisfied, to which the liquidated structure is responsible in connection with the infliction of some harm in terms of life and health. The operation is carried out through the capitalization of the corresponding direction of payments of a time-based nature.
- The second in succession is paid severance pay and salaries to employees promoting activities under an employment contract. It is important to note that it is also necessary to include payments to employees under the contract, as well as remuneration under individual copyright contracts.
- Third in priority are the creditors' claims for those obligations that are secured by means of a pledge of property complexes of the structure to be liquidated.
- The fourth pay off the necessary payments to the budget and extrabudgetary funds.
- Last of all, settlements are made with other creditors according to the rules corresponding to the current legislation.
Satisfying liquidation requirements of banks
It is important to note that in the process of liquidation of banking structures, as well as other credit institutions that are involved in raising funds from citizens, the requirements of those citizens who are considered directly creditors of banks, or other credit institutions that are also involved in raising civil funds must be satisfied . By the way, in the first place, in this case, it is also necessary to satisfy the requirements of an organization that implements a certain functionality in terms of mandatory deposit insurance.
An interesting addition is that the satisfaction of the actual requirements of each queue occurs only after the corresponding requirements of the previous queue are satisfied. In case of insufficiency of property complexes of the structure, they are distributed among all creditors one by one according to the rule of proportionality (in proportion to the sums of claims that, one way or another, are to be satisfied, unless otherwise specified by law).
Types and procedure for the liquidation of a legal entity. Final stage
The final stage of the liquidation of the structure is the formation by the liquidation commission of a balance sheet, which is subject to approval by the founders (participants) or the body that made the decision to implement the liquidation procedure in relation to the legal entity. Sometimes the approval of the liquidation balance occurs in agreement with the authorized body of the state. This operation is appropriate only in accordance with applicable law. The concept and types of liquidation of a legal entity implies that the property that remains after the absolute satisfaction of creditor claims is transferred directly to the founders. This happens for a simple reason: they are endowed with property rights to these property complexes or binding rights in relation to the structure. In addition, everything works if a different procedure is not provided for by law, constituent documentation or legal acts.
State liquidation of a legal entity refers to the completed procedure, and the legal entity itself is considered to have permanently ceased to exist only after making the appropriate entry in the state register.
Alternative type of liquidation structure
In addition to the above types of elimination, there is an alternative way to perform this procedure. So, an alternative type of liquidation indicates the cessation of the activity of a company in the non-traditional sense of this phrase. It is important to add that this type is not similar to other forms of liquidation of a legal entity. So, a lot is changing regarding the structure: name, participants, legal address and other information contained in the register. Nevertheless, the structure itself continues its life activity, although information about it is excluded from the state register.As it turned out, the actual liquidation procedure is not carried out, however, in relation to the participants of the company, it permanently stops functioning.
It is necessary to add that the liquidation of certain types of legal entities occurs precisely in accordance with this method. What are its advantages? Firstly, this is a great way to part with a structure that has some debt. Secondly, the process itself does not contain any difficulties, because:
- Excluded notice of liquidation of a legal entity in relation to creditors.
- There is no need to obtain permission from the registering organization.
- The formation of the liquidation balance sheet is not carried out.
It is important to note that the reorganization of a legal entity also refers to alternative methods of liquidation proceedings.
Bankruptcy liquidation
Often the good reason for both voluntary and forced liquidation proceedings is the economic failure of the structure. Like the methods described in the previous chapter, bankruptcy serves as an alternative way to close a company. So, if a market participant is recognized financially insolvent by a decision of a commercial court, then it is automatically excluded from the state register of legal entities. It is important to add that an individual entrepreneur or organization does not participate in the liquidation procedure - it is mainly carried out on the basis of a court verdict by the tax authorities.
The economic insolvency procedure is initiated if certain signs are identified. So, for various forms of organizational and legal significance, the approval of individual criteria occurs. For example, the arguments for bankruptcy proceedings against an individual entrepreneur are the following points:
- Exclusion of performance of own obligations to creditors within three months.
- Debt equal in the amount of 500 000 rubles.
It is important to add that in relation to the LLC, a single sign of economic insolvency is performed - failure to fulfill one’s own obligations to creditors within three months.
Advantages and disadvantages of liquidation procedures
In conclusion, it will be very advisable to consider in detail the currently relevant advantages, as well as the disadvantages of various procedures of a liquidating nature, carried out in relation to certain structures of commercial or non-commercial use. It is important to note that each of the methods contains its own pros and cons, so it is very important to choose the right and most profitable way in the case of a decision to conduct such a procedure.
Thus, the main advantage of the official conduct of the liquidation procedure is the ability to terminate the functioning of a company or individual entrepreneur on legal grounds without some difficulties. The disadvantage in this case is the absolute impossibility in terms of implementing the procedure with existing debts to any structures, as well as the length of the process itself, which is often tiring and is absolutely not profitable.
It is worth noting that the implementation of alternative methods for the termination of the company is taking place quite rapidly compared to the above method. But it reflects very interesting disadvantages, which are the high probability of a violation of legal norms and the recognition of the invalidity of the liquidation procedure that has been committed.
The recognition of economic insolvency gives the same opportunity for the absolute liquidation of a market entity and the cancellation of all its debt obligations.The main disadvantage of bankruptcy is a categorical ban on the development of economic activity for individual entrepreneurs during the annual period of time. In addition, there is a considerable chance of losing the entire property complex.