Legal Regulations
The primary sources of legal regulation concerning insolvency are the following:
Part 1 of the Civil Code of the Russian Federation as of November 30, 1994 (hereinafter referred to as the «Civil Code of the RF»);
the Federal Law No.127-FZ dated October 26, 2002 «On Insolvency (Bankruptcy)» (hereinafter referred to as the «Law on Bankruptcy»);
What is an Insolvency in compliance with the Russian Laws?
An insolvency (bankruptcy) is an inability, which an arbitration has recognized so, of a debtor to meet in full the claims of his creditors concerning fiscal liabilities of that debtor or to settle the payments that are mandatory.
Who May eventually become a Broke?
An individual, including sole entrepreneurs or legal entities, is deemed to be a debtor if that person is not capable to fulfill the claims of the lenders relating to monetary liabilities of the said man and/or if that man fails to settle the compulsory payments within an interval as supplied for by this Federal Law. Yet, at the present time, the legal standards, which relate to individual who isn’t a private entrepreneur, do not apply and so merely a legal thing or a private entrepreneur may be held insolvent.
Indicators of Bankruptcy and Necessary Conditions for Filing Bankruptcy Petition
An individual is deemed to be not able to fill the claims of the lenders relating to fiscal indebtedness of that individual and/or to settle compulsory payments if the various satisfaction of claims or settlement of compulsory payments have not been effected within a span of three months from the date, on which such satisfaction of claims or a mandatory payment should have been effected, and provided the sum of that person’s liabilities exceeds the value of the entire property, which is in possession of that individual.
A legal entity is deemed to be unable to meet the claims of the creditors relating to financial liabilities of that entity and/or to settle compulsory payments in the event the respective satisfaction of claims or settlement of compulsory payments have yet to be effected within a span of three months from the exact date, on which such satisfaction of claims or a mandatory payment should have been effected.
A court conclusion shall, as a rule, confirms the claims in respect of a debtor being by decision of respective state authority or in effect.
Submitting Application to Arbitration Associating to the Action of Bankruptcy
An authorized bodies, a bankruptcy trustee and a debtor are entitled to fill out an application to arbitration in order a debtor be held bankrupt.
Bankruptcy trustees mean any lenders in respect of whom the financial obligations have appeared, except for the authorized bodies or individuals to whom a debtor is liable for the damage to life or well-being, or is accountable to pay remuneration to the authors of the outcomes of intellectual tasks, or the founders (participants) of a body indebted in relation to indebtedness arising out of such engagement;
A debtor has right to submit a debtor’s application to arbitration if such debtor anticipates a bankruptcy and supplied that there are circumstances that give an express signs of that a debtor will likely not be able dispatch the fiscal liabilities and/or settle the mandatory payments in a span established.
The Law on Bankruptcy provides for the cases where a debtor’s application must be submitted by a chief officer of a body indebted or a private entrepreneur to arbitration. If that chief officer fails to fulfill this obligation then the said policeman will bear, together with a debtor, a subsidiary liability (Clause 2, Article 10, Law on Bankruptcy).
Stages of Bankruptcy Process
The following processes are applied in the duration of consideration of debtor’s case, whilst a debtor is a legal thing:
Oversight — a procedure, which is applied in the span of bankruptcy proceedings to a debtor to be able to ensure a debtor’s property, to execute the evaluation of a debtor’s financial standing, to prepare a register of that debtor’s creditors’ claims and hold the first meeting of creditors;
Financial sanation — a procedure, which is employed to a debtor with a view in the duration of bankruptcy proceedings to repay debts in accordance with a schedule of debts repayment and to recover that debtor’s solvency;
External management — a procedure, which is employed in the span of bankruptcy proceedings to a debtor to be able to regain that debtor’s solvency;
Receivership — a procedure, which is used to a debtor that’s been declared bankrupt with a view to a proportioned satisfaction of the creditors’ claims in the span of bankruptcy proceedings;
Amicable resolution — a procedure, which is applied with the purpose of conclusion of the proceedings at any of the course of bankruptcy proceedings’ stage in it by way of reaching an arrangement between a debtor and its lenders.
If a debtor under bankruptcy proceedings is a person then the following procedures apply:
amicable settlement;
other procedures as supplied for by the Law on Bankruptcy.
