Dictionary-reference book for financial managers - liquidation procedures in bankruptcy

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One of the simplest procedures in the field of bankruptcy is the process of bankruptcy of a legal entity subject to liquidation. According to Art. 222 Federal Law, bankruptcy of a legal entity subject to liquidation is carried out provided that the value of all material property cannot pay off its debt to the creditor.

A special commission dealing with bankruptcy proceedings sends an application to the arbitration court, which indicates the bankruptcy of the legal entity. If such a commission has not been created, this document is sent to the court by the head of the debtor.


In this case, the bankruptcy process will take place without some of the nuances corresponding to the bankruptcy process of an individual subject to liquidation. In the event of bankruptcy of a legal entity that ceases its activities due to liquidation, monitoring and external regulation operations are not carried out.

After the court declares a legal entity bankrupt, a receiver is appointed for bankruptcy proceedings. This is one of the distinctive features of the case of declaring the debtor bankrupt. In this case, the bankruptcy process is considered simplified. Since the debtor is already bankrupt, it is not considered necessary to apply general requirements to him in the future. All legal features that are prescribed in the bankruptcy law disappear.

All actions taken during bankruptcy, except for the creation of bankruptcy proceedings, are aimed at preserving the organization in any possible way. In simplified bankruptcy, the main task is to terminate the existence of the debtor organization. If there is debt to creditors, the bankruptcy process can be considered the most optimal and legal method, leading to the termination of the debtor’s activities.

The sequence of operations performed during the process of terminating the activities of a legal entity in debt includes two main stages. There are certain features of the bankruptcy of a liquidated debtor that are reflected in these transactions.

Bank bankruptcy procedure

Unlike the bankruptcy of individuals and legal entities, bank bankruptcy ends with the liquidation of the financial institution.

According to paragraph 9 of Art. 189 Federal Law, bank management together with the Central Bank carry out bankruptcy prevention or financial rehabilitation. Bank founders, members of the Supervisory Board and senior management of the institution are appointed responsible for the procedure. Here you can read about the bankruptcy of credit institutions .

Most often, in such a situation, reorganization is used - the merger of several banks or the liquidation of individual structures due to their unprofitability.

The bank bankruptcy procedure is carried out under the control of the Central Bank. During the event, the responsible body appoints a temporary administration to replace the previous management of the bank. In some cases, the Deposit Insurance Agency (DIA) is involved in the liquidation.

Step-by-step instruction

The first stage of bankruptcy is the process of voluntary liquidation of a legal entity. It consists of the following steps:

  1. Appointment of a special commission, which should deal with the bankruptcy procedure of a legal entity subject to termination of its activities. This commission is created after a decision is made by the participants in the liquidation or by a special body of a legal entity that has the right to do so, given to them by the constituent documents. The registration authority must be notified of the fact of liquidation no later than three days after approval of the decision to terminate the activities of the legal entity.
  2. The created commission publishes information in the press about the termination of the debtor’s activities and the demands of its creditors. Then the creditors send a written application to terminate the debtor's activities. The commission carries out actions to collect receivables.
  3. When the time given to creditors to put forward their claims ends, the commission calculates a preliminary balance, which includes information regarding the debtor's existing property, a list of creditors' claims, and the commission's decision. The drawn up balance sheet upon termination of the debtor's activities is approved by the legal entity.

The second stage of the liquidation procedure is the bankruptcy of the debtor itself. It includes the following operations:

  1. If a legal entity does not have the necessary property, or rather its value, which can satisfy the needs of creditors, the debtor is sent a document indicating the signs of bankruptcy. Then, an application for bankruptcy of a legal entity subject to termination of activities is sent to the bodies of the arbitration court.
  2. The court, after reviewing the materials, begins bankruptcy proceedings and appoints a manager, which means that the debtor is officially declared bankrupt. From the moment the manager is appointed, he receives all the powers of the head of the legal entity. Also, it sends information about bankruptcy to the unified state register. Creditors are given the opportunity to put forward their claims against a legal entity within 30 days from the date of announcement of their debtor’s bankruptcy in the press.
  3. The bankruptcy manager carries out an inventory of all property of the legal entity and appoints a specialist who makes the assessment. Performs the procedure for returning property of a legal entity that was transferred to third parties. Responsibility for the safety of the property lies with the manager.
  4. A month later, after completing the inventory and valuation procedure, the manager puts forward a proposal to sell all the property of the legal entity and carries out this procedure. Then, in order of priority, it makes payments to creditors.

At the end, the materials of the liquidation and bankruptcy procedures are sent to the judicial authorities, which approve the end of bankruptcy proceedings. The court sends the decision on liquidation to the registration authority, after which an entry is made in the Unified State Register of Legal Entities about the termination of the activities of the legal entity.

Temporary manager in case of bank bankruptcy

A special place in the procedure is occupied by the temporary manager, who maintains the current financial records of the bank based on the decision of the arbitration court. According to Art. 51 Federal Law, the observation period should not exceed 7 months.

The powers of the temporary manager include the following actions:

  1. Determination of invalid transactions with subsequent appeal in court.
  2. Meetings with creditors and analysis of their claims against the debtor.
  3. Representing the bank's interests at court hearings regarding the validity of creditors' claims.
  4. Taking measures to preserve bank property.
  5. Removal of financial institution managers from participation in bankruptcy proceedings.
  6. Conducting independent audit and accounting control of documentation.

The interim manager is in close cooperation with creditors. In particular, we are talking about holding a meeting of creditors. Based on the results of the hearings, the bankruptcy trustee draws up a report on his work and sends the document to the arbitration court.

On a note! The involvement of a temporary manager forms the basis of the bankruptcy procedure. The auditor ensures the safety of bank property and a comprehensive review of the financial situation.

Bankruptcy or liquidation of an organization, what is the difference?

Due to the inability to pay debts to creditors, enterprises cannot fully conduct business activities, as a result of which they become financially insolvent.

The insolvency of legal entities leads to their abolition, which is formalized by introducing a liquidation or bankruptcy process. When the economic recovery of a business is impossible, property is sold to pay off debts and the organization is officially closed.

Let's consider how bankruptcy and liquidation differ, what are the specific features and consequences of both procedures.

The difference between liquidation and bankruptcy

The difference between liquidation and bankruptcy

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Difference between liquidation and bankruptcy

Unsuccessful business

may lead to liquidation or bankruptcy of the enterprise. What are these procedures?

Fourthly, liquidation can be carried out (in cases where it is voluntary) without the role of arbitration. All a company needs to do, if it has no debts, is to contact the Federal Tax Service.

Liquidation of a legal entity without resorting to bankruptcy

  • Liquidation of a company is the final step of bankruptcy, but not the only one.

Although the concepts of bankruptcy and liquidation are closely intertwined and are often perceived as integral stages of terminating the economic activities of a legal entity, Russian legislation allows for the possibility of closing a company without bankruptcy. In a number of different cases, this method of closing an enterprise is more justified from the standpoint of time and foreign exchange costs.

How does liquidation of a legal entity differ from bankruptcy?

  • Achieving the goals set when opening the company;
  • Unprofitable activities;
  • Business owners decision;
  • Loss of enthusiasm for the field of activity, etc.

If signs of bankruptcy are found, it is determined

An option for subsequent actions for a legal entity is financial recovery or closure of the enterprise.

When considering an insolvency case, anti-crisis procedures are used.

The main objectives of their implementation are the restoration of the criteria for the continuation of business by a business entity and the payment of amounts owed to counterparties.

Features of bankruptcy and liquidation of enterprises

Officially, bankruptcy status is assigned to an enterprise after a court decision is made in the prescribed manner and according to all the rules.

According to the law and on the basis of a statement from creditors or the debtor himself, the company came to this state of affairs due to excess expenses during a certain period, which resulted in insolvency during the last 3 months . At the same time, the enterprise did not have a source that could cover losses.

  • The company may be required to undergo financial rehabilitation;
  • The Tribunal has the power to propose restoration through reorganization;
  • The company may be asked to refinance;
  • If past measures do not help, only in this case a decision on liquidation will be made;
  • One of the methods to save the situation is to find an agreement with creditors through a peaceful method.

Source: https://kpa.ru/bankrotstvo-ili-likvidatsiya-organizatsii-v-chem-raznitsa/

Some aspects of bankruptcy of liquidated debtors

In conditions of the financial crisis, stagnation and decline of the economy, and the general difficult economic situation, the issues of protecting the legitimate interests of creditors in conditions when the debtor becomes insolvent and, conversely, protecting the interests of the debtor in the event of attempts at a hostile takeover or seizure of property are as relevant as before.

A well-known and widely used mechanism that solves these problems is, of course, the procedure for declaring it insolvent (bankrupt). Chapter XI of the Federal Law of October 26, 2002 “On Insolvency (Bankruptcy)” [1] (hereinafter referred to as the Bankruptcy Law), which provides for simplified bankruptcy procedures, is among the first to provide for bankruptcy of the debtor being liquidated. Despite its long existence, there are a number of theoretical and practical problems associated with the simplified procedure for bankruptcy of liquidated debtors.

The simplified bankruptcy procedure of a liquidated entity is a special independent element. The main feature of the simplified bankruptcy procedure for a legal entity being liquidated, in our opinion, is the unique status of the debtor being liquidated. The liquidated debtor is a special subject of bankruptcy relations due to the fact that simplified insolvency (bankruptcy) proceedings are initiated only if during the liquidation process it is revealed that the debtor’s funds are insufficient to satisfy all creditors’ claims. In this case, the size of this deficiency does not matter - even if it amounts to several rubles, certain entities have an obligation to apply to the arbitration court with a statement of insolvency (bankruptcy) of the debtor.

We especially note that when deciding on the insufficiency of property to cover the claims of creditors, based on the provisions of the Bankruptcy Law, the size of this insufficiency does not matter. In other words, §1 of Chapter XI of the Bankruptcy Law does not contain provisions on establishing the amount of insufficient claims and does not refer to the first chapters of the Bankruptcy Law, noting only that bankruptcy in a simplified manner is carried out if the value of the property of the debtor - a legal entity, in relation to whose liquidation decision was made is insufficient to satisfy the claims of creditors. Thus, even if the amount of debt is insignificant and amounts to minimal amounts, certain entities, for example, the liquidation commission, have an obligation to apply to the arbitration court with a statement of insolvency (bankruptcy) of the debtor.

This case is the second unique, along with the special status of the debtor, against the background of the general bankruptcy procedure, as well as individual bankruptcy procedures. One of the conditions for the arbitration court to accept an application to declare the debtor bankrupt and to initiate bankruptcy proceedings in accordance with Art. 6 and paragraph 2 of Art. 33 of the Bankruptcy Law is the presence of a minimum amount of debt of the debtor to the creditor. Accordingly, if the debtor's debt is less than the minimum amount established by the Insolvency (Bankruptcy) Law, bankruptcy proceedings cannot be initiated. The total requirements for a debtor who is a legal entity must be at least three hundred thousand rubles, and for a debtor who is a citizen - at least ten thousand rubles. There are exceptions to this rule when insolvency proceedings are initiated regardless of the amount of debt, namely for a legal entity undergoing liquidation, provided that the value of its property is insufficient to satisfy the claims of creditors. Such a legal entity is liquidated through bankruptcy, regardless of the amount of the claim in accordance with Art. 224 of the Bankruptcy Law.

Thus, we come close to one of the foundations of bankruptcy law in general, namely the question of the bankruptcy criterion, and in this case, the bankruptcy criterion of the liquidated debtor.

The criterion of insolvency (bankruptcy) is usually understood as the general approach to insolvent debtors adopted by law; the criteria are specific parameters, the presence of which is necessary for the acceptance of a bankruptcy application, as well as for declaring the debtor bankrupt. World practice knows only two criteria for insolvency - non-payment and insolvency.

Bankruptcy law is directly based on the criterion of insolvency. But in relation to liquidated debtors, the criterion of non-payment is applied, since the minimum amount of debt does not matter. Non-payment was proven already at the time of initiation of insolvency (bankruptcy) proceedings. We can say that the non-payment criterion is applied in a strengthened absolute sense.

It is absolutely logical that since the goal of all simplified procedures is to satisfy the claims of creditors as quickly as possible, if possible, and to exclude the debtor from the register of legal entities. Some researchers rightly believe that in this case, simplification and acceleration are introduced in order to more quickly exclude such a debtor from property circulation, since he has practically ceased his activities [2].

Also about [3]. The last statement, in our opinion, is correct, since the only one within the meaning of paragraph 1 of Art. 224 of the Bankruptcy Law, the criterion for distinguishing these categories of persons into a simplified procedure is that in relation to these categories of legal entities a decision has been made to liquidate and their founders do not want to continue their activities. At the same time, it is absolutely not necessary that this person does not have prospects for financial well-being, since in accordance with Art. 61 of the Civil Code of the Russian Federation, a legal entity is liquidated by decision of its founders (participants) or a body of the legal entity authorized to do so by the constituent document [4].

Although not all researchers completely agree with this state of affairs and believe that it is necessary to supplement the list with other procedures. For example, M.V. Telyukina believes that the non-application of restoration procedures to a liquidated debtor is not justified; nothing prevents the participants of the latter from changing their minds and deciding to continue its activities, which is impossible when starting bankruptcy proceedings in a simplified manner. According to Telyukina, it would be completely justified to include in the Bankruptcy Law the possibility for the court, by decision of the founders (participants) of a legal entity, to use restoration procedures, including a settlement agreement, if the liquidation was voluntary [5].

There are other proposals to expand the list of bankruptcy procedures for legal entities. For example, they believe that it is necessary to make the monitoring procedure mandatory in the event of bankruptcy of liquidated debtors [6]. Observation, by nature, is not rehabilitative, but aims to carry out preparatory actions in the implementation of bankruptcy of legal entities. As part of the monitoring, a function that is important for the entire bankruptcy procedure is implemented, namely the compilation of a register, in other words, the determination of the debtor’s creditors and the amount of their claims to be satisfied. In addition, the property belonging to the debtor is identified. Undoubtedly, it is also important that, as part of supervision, creditors have the right to influence the candidacy of an arbitration manager, whose role in the bankruptcy procedure is extremely significant. All these possibilities, in the normal bankruptcy procedure, carried out in the monitoring procedure, are the powers of the liquidation commission and are exercised even before filing a bankruptcy petition, which may infringe on the rights of creditors, for example, if, for various reasons, they were not included in the register of claims to to the liquidated debtor. It also deserves special attention that the short two-month period for inclusion in the register provided for in Art. 142 of the Bankruptcy Law is preemptive, which is directly stated in the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated July 26, 2005 “On some issues related to the calculation of certain deadlines in bankruptcy cases” [7]. Meanwhile, when monitoring is introduced, creditors have much more time to submit claims due to the long period of monitoring itself.

Due to the large concentration of powers among the liquidation commission, the head of the debtor and the founders, which under the usual bankruptcy procedure would have been with creditors within the framework of supervision, a simplified bankruptcy procedure for a liquidated debtor, according to some scientists, could represent a convenient tool for avoiding payment of debts with skillful use [6]. A decision is made to liquidate the debtor, the tax authority is notified about this, a liquidation commission is created, and a bankruptcy petition is filed with the arbitration court. At the same time, it is quite possible that affiliated creditors will be indicated and an affiliated bankruptcy trustee will be selected. It is doubtful that given the short and restrictive period for creditors to present claims in the conditions of modern civil circulation, all creditors will have time to present their claims. Such a situation would allow the debtor to formally, absolutely legally, avoid paying debts. These circumstances are a strong argument in favor of introducing monitoring as part of the bankruptcy procedure.

However, in our opinion, we cannot agree with the opinion regarding the use of restorative procedures and observation procedures. In this case, all the expediency of carrying out bankruptcy in a simplified manner disappears. If additional procedures are introduced, the main value of the simplified procedure is lost, namely its speed. The introduction of additional procedures increases the time it takes to complete the bankruptcy of a person whose rehabilitation is not needed by anyone, and therefore increases the costs of the procedure and creates additional burden for the court and for the insolvency administrator.

In our opinion, it would be more reasonable to resolve the issue of restoring the activities of a legal entity if its founders or participants refuse to liquidate through a settlement agreement. This conclusion has a number of advantages.

Firstly, Art. 225 of the Bankruptcy Law excludes observation, financial recovery and external management as stages of bankruptcy of a liquidated entity. Thus, the settlement agreement, formally being a bankruptcy procedure, is not directly excluded for the bankruptcy of liquidated debtors.

Second, the settlement ends the bankruptcy case by balancing the interests of all parties. When approving a settlement agreement, the arbitration court in the ruling on approval of the settlement agreement indicates the termination of bankruptcy proceedings, and if the settlement agreement is concluded during bankruptcy proceedings, after declaring the debtor bankrupt and opening bankruptcy proceedings, it also indicates that the decision to recognize the debtor is bankrupt and the opening of bankruptcy proceedings is not enforceable.

Thus, a settlement agreement would allow the founders or participants of a legal entity, if they would like to stop liquidation and resume activities, to do what they want and at the same time complete the proceedings either with claims to creditors repaid or with restructured ones, which would undoubtedly contribute to a “fresh” and without debt to restart the activities of a legal entity.

Regarding the short period for inclusion in the register and the shift in the “center of gravity” of powers towards the liquidation commission at the stage before filing a bankruptcy petition with the arbitration court, in our opinion it would be more reasonable to extend the period for inclusion of claims in the register, to provide the arbitration manager with the authority to identify creditors within the deadline for submitting claims and establish additional administrative liability for the founders, head and chairman of the liquidation commission with the possibility of disqualification.


  1. Federal Law of October 26, 2002 “On Insolvency (Bankruptcy)” // Rossiyskaya Gazeta, N 209–210, 02.11.2002.
  2. Karelina S. A. Legal regulation of insolvency (bankruptcy). M., 2006. P. 227
  3. Pulova L.V. Bankruptcy of a liquidated debtor // Bulletin of the Moscow Arbitration Court. 2005. N 1.
  4. Civil Code of the Russian Federation//Rossiyskaya Gazeta”, N 238–239, 12/08/1994
  5. See: Telyukina M.V. Commentary on the Federal Law of October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)”. M., 2004
  6. Kostovarov A. Bankruptcy of a liquidated debtor // “Corporate Lawyer”, 2009, No. 11. M: WoltersKluwer
  7. Information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated July 26, 2005 “On some issues related to the calculation of certain deadlines in bankruptcy cases” // Bulletin of the Supreme Arbitration Court of the Russian Federation, 2005, No. 10

What is bankruptcy?

Bankruptcy of a legal entity is understood as its inability to pay its debt obligations to creditors. A legal entity is obliged to declare its insolvency if signs of bankruptcy are detected during its activities, or if during the liquidation process it becomes obvious that the company will not be able to pay creditors due to insufficient property.

Failure to file an application to begin the bankruptcy process when it was required by law exposes the company to administrative liability and penalties.

If the court introduces a bankruptcy procedure against a company, then during this stage an inventory and assessment of all property owned by the company is carried out, then it is put up for auction and, based on the results of the sale, the proceeds are used to pay off the claims of creditors. Unliquidated liabilities resulting from bankruptcy are canceled and the company ceases to operate.

As a result of the company being declared bankrupt and the court introducing bankruptcy proceedings, it must be closed (liquidated). The initiative to declare a company bankrupt can come from its owners, creditors or authorized bodies.

Features of bankruptcy of legal entities

The Arbitration Court's proceedings against the debtor enterprise begin if the organization's debts amount to more than 300 rubles. Before going through the bankruptcy procedure, the management of the enterprise must take all necessary actions to prevent this from happening.

The arbitration court will begin the procedure for initiating bankruptcy if there are grounds for this prescribed by law. During the first meeting, the parties come to an agreement on financing the bankruptcy procedure (from the debtor company with deferred payments or from creditors).

The bankruptcy procedure can be initiated by the debtor company itself or by its creditors. The burden of bearing the costs of the bankruptcy procedure falls on the shoulders of its initiator. The subjects of bankruptcy proceedings are the debtor and all his creditors.

Before starting the bankruptcy procedure, the Arbitration Court makes sure that there are all signs of bankruptcy of the enterprise. The judiciary may delay starting the process if the debtor company is gradually paying off its debts, but over time the court may return to resuming bankruptcy proceedings.

Speaking about what kind of bankruptcy procedure a temporary manager carries out, it is worth noting financial recovery. At this stage, bankruptcy liquidation procedures are temporarily suspended.

If the financial recovery is successful, the debtor enterprise will gradually reach the stage of completing the bankruptcy procedure and exiting it. After this, the Arbitration Court issues a certificate confirming the absence of bankruptcy proceedings.

Prerequisites for forced bankruptcy

Currently, established legislation defines a number of conditions under which a debtor can be declared insolvent and held accountable for violating his obligations. These conditions include:

1. Violation of obligations for timely payment of the following types of payments:

– cash loan; – compensation under employment contracts; – alimony; – payments intended to compensate for damage caused; – insurance premiums; – pension contributions; – royalties.

If the debtor does not fulfill its obligations within 3 months from the date of the appointed deadline for their fulfillment, the court may allow the applicant to immediately begin forced bankruptcy proceedings in accordance with all the requirements and norms of modern legislation. However, before making the final decision to go to court, it is necessary to meet with the debtor again and try to resolve the conflict peacefully.

2. Violation of obligations to timely pay taxes and other payments to the state budget.

This takes into account not only the debt of the debtor itself, but also of all its branches and representative offices. The maximum period of possible non-fulfillment of financial obligations may be 4 months from the date of the appointed deadline for their fulfillment (provided the amount is at least 150 MCI).

If the debtor continues to refuse to pay, then his opponent can begin to file a forced bankruptcy procedure, having previously received permission from the judicial commission.

3. Violation of obligations to other types of credit institutions, which were not fulfilled by the debtors for 3 months and amount to:

– at least 300 MCI (private enterprises); – not less than 1000 MCI – (legal entities).

Thus, the main prerequisite and full-fledged right for a creditor to apply to the court with a demand to begin an immediate forced bankruptcy procedure is the partial or complete insolvency of the debtor, due to which he is unable to fulfill his payment obligations.

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