What is bankruptcy in Russia and why it is necessary?
According to the definition stated in the Bankruptcy Law, BANKRUPTCY is the inability of the debtor, recognized by arbitration court, in full to satisfy requirements of creditors for liabilities and (or) to fulfill a duty on payment of obligatory payments.
In other words, BANKRUPTCY is recognition of the fact of insolvency by court.
The key moments here are:
- first, inability to satisfy requirements of creditors within more than three months from the date when they had to be executed — it is a bankruptcy sign;
- secondly, recognition of the bankrupt requires recognition of this fact by arbitration court;
- thirdly, for presentation of the statement for recognition of the bankrupt it is necessary that the amount of debt was 100 thousand rubles and more.
Differently, SIGN of BANKRUPTCY is an existence of the debt delayed for more than 3 months.
The world practice developed 2 main criteria of bankruptcy signs definition:
The SIGN of PROPERTY INSUFFICIENCY– when the debt size is more, than the property which has remained with the enterprise;
The SIGN of IMPOSSIBILITY TO PAY – existence of outstanding debt.
In most cases in the Russian legislation on bankruptcy the principle of impossibility to pay works, that is the fact of existence of outstanding debt for more than 3 months is the bankruptcy sign which is established subsequently by arbitration court during consideration of the statement for bankruptcy.
Restriction of the debt size – not less than 100 thousand rubles – restriction, below which requirements of the creditor at submitting of application about bankruptcy are not considered. It doesn’t mean that demands with the smaller sum it is impossible to make to bankrupt organization. It means that in case if the size of requirements less than 100 thousand rubles, the statement for bankruptcy won’t be accepted to work by arbitration court.
The main advantage of bankruptcy procedure is that it is the only lawful means not to pay on debts. As a result of carrying out procedure of bankruptcy creditor requirements are considered extinguished, and the enterprise is excluded from EGRUL.