Bankruptcy is represented by the financial insolvency of a particular company. It consists of several stages, each of which is intended for specific purposes. The bankruptcy supervision procedure assumes that an arbitration manager is selected to study the financial condition of the enterprise for 7 months. It identifies all creditors and company assets. After this process, it is determined whether the company can overcome the financial crisis and cope with its obligations in order to continue to function effectively. If there is no opportunity to restore solvency, then a bankruptcy proceedings are ongoing.
Signs of company bankruptcy
Federal Law No. 127 “On Insolvency” describes the main features by which it can be understood that the company is indeed on the verge of bankruptcy. If available, certain measures are required to improve the financial condition and repay the debt.
A company may start bankruptcy proceedings if it cannot manage its debts within three months. Moreover, she should not have any financial opportunities to pay off her debt. Under such conditions, creditors begin to file lawsuits in court to declare the insolvent insolvent. Other documents are attached to the statement of claim, confirming the fact that the company’s debts are not repaid within three months or a longer period.
After reviewing all the documents, the court decides to declare the company insolvent. Based on this decision, the bankruptcy process begins, consisting of several stages. If there is a likelihood that the company, with the help of competent actions of a specialist, will be able to improve its financial condition, then, according to the bankruptcy law, an observation procedure is appointed.
What tools can be used in bankruptcy?
If a company goes through this process, then really different tools can be used, on the basis of which the repayment of debts and the improvement of the financial position of the company are ensured. Each measure has its own nuances. These include the following:
- The procedure for monitoring bankruptcy of a legal entity. Based on this stage, the economic condition of the company is assessed and analyzed. Opportunities for restoring solvency are identified. Measures are being taken to improve the financial condition of the manager.
- Recovery. This process is being implemented by the direct management of the company. Its purpose is to identify all creditors and draw up an optimal schedule, based on which existing debts will be repaid. Such a schedule is agreed with creditors, and if they agree to wait for the transfer of funds, then further work of the enterprise is allowed. This is possible with appropriate prospects.
- External management. Based on this stage, the management of the company loses its authority, therefore, the appointed external manager independently manages the activities of the company. He performs all possible actions to pay off creditors and maintain the functioning of the enterprise.
- Bankruptcy proceedings. It involves the sale of assets of the organization at auction. This process allows you to get a certain amount of funds, which is then sent to pay off the debts of the enterprise.
- Drawing up a settlement agreement.This process can be performed at any stage of bankruptcy. This is possible if beneficial agreements are reached between the debtor and the creditors regarding the terms of repayment of debts and the procedure for returning funds.
Each stage has its own nuances. Initially, the bankruptcy supervision procedure is carried out, the main purpose of which is to identify all opportunities for improving the financial condition of the company.
When is surveillance used?
The bankruptcy process is usually initiated by creditors, who file a lawsuit against the non-payer in court. Over the next 5 days, the validity of the submitted application is checked. The process usually does not take more than 15 days, but can reach a duration of 30 days. If there are really all signs that a particular company is insolvent, then a monitoring procedure is appointed for bankruptcy of a legal entity.
Bankruptcy is considered legal if there are signs of:
- the company has debts exceeding 300 thousand rubles;
- the debt is not repaid within three months.
An indispensable stage of legal proceedings is observation. The purpose of the bankruptcy observation procedure is to solve several problems:
- the court ensures the safety of property and various assets of the enterprise from ruin or theft by the management of the company or its employees;
- investigated the financial condition of the debtor;
- the reasons for the appearance of insolvency are examined, since the court must ensure that the bankruptcy process is not fictitious or premeditated.
Standard observation is the preparatory process. Based on it, a decision is made on how the bankruptcy process will continue. Based on the results of the monitoring procedure in bankruptcy, it is determined whether the insolvency process will be launched or if financial reorganization will be applied.
How is it done?
The procedure is appointed only by the court. It involves an analysis of the situation. For this, sequential actions are performed:
- all interested parties represented by the owners of the company, the Federal Tax Service, banking institutions and creditors are informed that a bankruptcy supervision procedure has been initiated in relation to the company;
- a temporary administrator is appointed by the court, and it is he who is engaged in various actions to study the organization;
- analyzes the financial condition of the company;
- a special register is formed, which includes all the requirements of the creditors of the company, and it lists all debts and their size;
- 10 days before the end of this process, a meeting of creditors is required to decide on further actions.
Typically, the process lasts no more than 5 months.
Why is a meeting of creditors held?
The meeting makes important decisions, which takes into account the information obtained as a result of the analysis of the state of the company. Remediation or external management may be applied.
If during the procedure for monitoring the insolvency of an enterprise’s bankruptcy it is revealed that there are no opportunities to restore the solvency of a company, then bankruptcy proceedings may be appointed immediately.
Process time
Initially, a court decision is made to initiate bankruptcy proceedings. How long does the follow-up procedure take? The maximum process takes 7 months.
During this period, the reasons for the liquidation of the enterprise are identified, all creditors are determined, the total amount of debt is calculated, all the assets of the company are taken into account, and it is also decided whether the company can get out of the crisis.
Practice shows that the introduction of a bankruptcy observation procedure is advisable for a period of 4 to 5 months.If during this time the company can get out of this unpleasant situation, then a peace agreement is drawn up with creditors. After that, the creditors submit a petition, on the basis of which the monitoring procedure is prematurely terminated.
How does the company work at this time?
During the implementation of the monitoring process, the company cannot dispose of the property, as well as issue new loans. As soon as the bankruptcy supervision procedure is introduced, a temporary administrator is appointed by the court. During the work of the company, he solves numerous tasks:
- studying the financial condition of the company;
- measures are taken to preserve the assets so that company owners do not use different methods to sell or dispose of property;
- an analysis is made of all completed transactions, which often allows you to appeal against different actions if they are specifically aimed at worsening the solvency of the enterprise;
- the manager forms a conclusion, where he points to the possibility of returning the organization’s solvency and improving its financial condition so that it can further manage its debts.
Although a temporary manager is appointed, he is not a substitute for the management of the company. Throughout the entire bankruptcy supervision process, he only controls the activities of the enterprise in order to prevent illegal actions by the management team.
What actions cannot be performed by management?
If a monitoring process is assigned, then company executives are immediately faced with numerous bans. These include the following:
- it will not work to get a new loan;
- it is impossible to sell or pledge the assets of the enterprise;
- You can not participate in different transactions;
- It is forbidden to pay dividends to all shareholders of the company;
- issue and sale of securities is not allowed;
- there is no opportunity to make any changes to the charter documents or to the composition of company participants;
- reorganization of the enterprise is impossible.
Additionally, at this time, penalties for various late payments cease to accrue. The property of the debtor is withdrawn. The management of the company must transfer all accounting documents to the manager within 15 days. Additionally, a list of company assets held by the company over the past three years is compiled. A report is transmitted monthly, in which all changes in the composition of the property are indicated.
What rights and obligations are granted to debtors?
The bankruptcy supervision procedure applied to the debtor gives each participant in this process certain rights and obligations. The company is endowed with privileges and obligations:
- bankruptcy proceedings may be initiated;
- It is allowed to appeal against various acts committed by the interim manager;
- the conclusion of this manager is being studied;
- the founders transmit the accounting documents to the appointed person;
- it is not allowed to obstruct the actions of the manager;
- all transactions should be made only under the supervision and with the permission of the head of the procedure;
- it is impossible to reorganize the enterprise or open additional structural units.
If the obligations of the debtor are not respected, then this becomes the basis for the early termination of the monitoring procedure, therefore, bankruptcy proceedings begin immediately.
Manager's obligations and privileges
The designated specialist performs the following steps:
- examines company documentation;
- controls the work of the company;
- receives payment for their activities;
- cannot evade his obligations;
- may remove directors and other employees of the enterprise;
- a specialist disputes illegal transactions;
- the manager must ensure that the assets of the firm remain untouchable;
- obliged to collect maximum information about creditors and keep a register of obligations.
Lenders themselves can initiate legal proceedings against the debtor and take part in various meetings. They have the right to appeal, but there must be documented evidence of debt.
The consequences of the procedure
As a result of the observation, different decisions can be made:
- the company is undergoing financial recovery;
- external management is carried out;
- in the absence of opportunities for restoration of solvency, a decision may be made on the initiation of bankruptcy proceedings, on the basis of which all property of the enterprise is sold to pay off debts.
It is the observation process that provides the opportunity to make the right decision.
Conclusion
Thus, observation is considered a significant stage of bankruptcy. The process is to study the economic condition of the company. For this, an experienced manager is selected who studies the documentation of the enterprise. Based on the information received, a decision is made on further actions regarding the organization.
Each participant in this process is vested with certain rights and obligations.