What is bankruptcy?

Bankruptcy of a company as defined by the Federal Law of the Russian Federation "On Insolvency (Bankruptcy)" is the inability of a company to fully satisfy the claims of creditors on monetary obligations and (or) to fulfill obligations to pay obligatory payments. Often the bankruptcy of a company is interpreted quite incorrectly as a complete ruin, the collapse of the company. In fact, it is an opportunity to settle debts. In most cases, this is the goal pursued by the debtor in initiating bankruptcy proceedings.

Legal entity bankruptcy is a process in which an organization's property is sold to pay off the debt, or special measures are imposed on the organization to restore its solvency to pay off debts.

The prerequisite for starting bankruptcy is a debt of more than 300,000 rubles, the deadline for settling which was more than three months ago. If within three months the company has not fulfilled its obligations on any kind of payments, be it payment to employees, tax payments, payments to creditors, and the total debt exceeds 300,000 roubles, then bankruptcy proceedings are launched. The company is declared bankrupt by an arbitration court decision.

Not only creditors or the tax inspectorate can apply to the court - the debtor company itself can request to be declared bankrupt. Bankruptcy procedure is one of the most effective ways to get rid of loans and debts, which do not allow the company to function normally and the proprietor to run his business in peace.

Often a company becomes bankrupt for the following reasons:

• Ineffective management of the organization
• Errors in the organization of the technological process
• Lack of production capacity
• Saving on advertising and market monitoring, assessment of demand, loss of markets due to ineffective marketing strategy
• Deficit of investment in business
• Borrowing on unfavorable terms
• Economic and political reasons

Where to check bankruptcy reports?

The information is contained in the tab Legal Framework → Bankruptcy.

You can also examine the details of each message.

It is especially important to check your current contracted counterparties for messages. Because it is possible to get into the first line of creditors by filing an application within the first month after publication. With a timely application, you can recover your share or prevent accounts receivable that will not be paid in the second turn by the court, as there may not be enough assets of the bankrupt company.

Bankruptcy of persons

Also, the head or co-owner of the organization can be declared bankrupt. Read more about this in the "Person Activities" article here.