Simplified corporate insolvency procedure

When does the simplified corporate bankruptcy scheme come into force?

If companies cannot otherwise restore their solvency, then this can be done by conducting a simplified bankruptcy procedure. Only two categories of defaulting firms can apply this scheme.

The first category includes those enterprises that cannot pay off creditors due to lack of property. In this case, the director or founder sends an application to the arbitration court institution. After accepting the petition, the judge decides to open a simplified bankruptcy procedure. It also initiates bankruptcy proceedings. Within thirty days, creditors are required to file claims against the debtor company.

Expert opinion

Popov Dmitry Alekseevich

Practicing lawyer with 7 years of experience in banking law

The second category includes enterprises that have long closed their operations, have no director or simply cannot be found. In this case, the creditor, the tax service or any other authority may apply to the arbitration court. After which all creditors receive a message from the bankruptcy trustee about the liquidation of the defaulter. Creditors have the right to make claims regarding debts.

Note! If during the bankruptcy process according to a simplified scheme it turns out that the company still has property, then the procedure will follow the standard system.

Introduction

According to the Law “On Insolvency”, every citizen received the right to declare himself bankrupt regardless of the amount of debt.
But from an economic point of view, it is advisable to think about starting a business if you have loans from 300 thousand rubles. Experts explain this approach by the fact that the case of declaring individuals insolvent is very expensive. The insolvency procedure is considered to be quite expensive. Therefore, experts advise resorting to it if you have a debt of at least 300,000 rubles. Why is the procedure considered costly? Because a citizen needs:

• 25 thousand rubles deposit with the court;
• 300 rub. pay a fee to the state;
• 10,000 rub. for publication in Kommersant. The amount indicated is for one publication;
• 5,000 rub. will be required for various legal expenses.

If a citizen has a debt in the range of 100 - 2000 thousand rubles, it is easier for him to pay off creditors on his own. Since 2021, the insolvency procedure requires the debtor to pay at least 100,000 rubles.

The Ministry of Economic Development adopted a law on simplified bankruptcy of individuals when the amount of debt is up to 700,000 rubles. It was decided to change the debt threshold to 700 thousand rubles.

The draft has already been submitted to the State Duma for consideration. It will take effect only on January 1, 2021. Financially failed citizens with a debt of 500,000 rubles. They wondered whether they should start the procedure now or wait for it to be simplified.

Requirements for opening bankruptcy under a simplified scheme

Such restrictions are strictly specified in Federal Law No. 127, Article 126. Let us express the main requirements for all legal entities:

• It is impossible to start the bankruptcy process according to a simplified scheme if the process of liquidating the company has not been initiated.
• The entire management of the enterprise is deprived of its powers. As soon as a bankruptcy trustee is appointed, the directors are required to transfer to him all property data, documentation and seals within three days.
• In order to conduct a transaction for the purchase and sale of property with the aim of underestimating its competitive value, it is necessary to obtain written permission from the insolvency administrator.

Advantages and disadvantages of the simplified bankruptcy procedure

Simplified closure has the following advantages over general closure:

1. Saving money for the founders, since monitoring and financial recovery activities, which are costly, are not carried out.
2. Carrying out liquidation in a shorter period of time than during general closure.
3. There is no need for a meeting of creditors.
4. Guaranteed liquidation of the enterprise in compliance with all norms and requirements of the law.

The disadvantages of the simplified process include the fact that it cannot always be carried out and for this a number of conditions must be met, namely:

1. Majority (sole) participant or shareholder when making a decision on liquidation.
2. The risk of challenging and invalidating transactions involving the alienation of assets.
3. Presence of an illiquid balance.
4. Large debts or court decisions that have entered into legal force to collect debts from the company.

Algorithm for carrying out the bankruptcy procedure according to a simplified scheme

The process of liquidation of enterprises follows standard steps. Let's look at them:

1. At a general meeting of the company’s founders, a decision is made to liquidate it. A liquidator is also appointed here. He is obliged to inform the tax office about the start of bankruptcy proceedings under the simplified system. After accepting the application, the tax authorities make a corresponding entry in the Unified Register of Legal Entities. From this moment on, the liquidator becomes the director of the company.
2. The liquidator is obliged to place information in the public domain about the commenced bankruptcy procedure. This is done through the media. In addition, he must provide this information to each creditor and other persons related to the enterprise.
3. Processes begin to verify the availability of possible property at the company. To do this, the liquidator must make appropriate requests to the tax office, Rosreestr, Rospatent, etc. It is necessary to reconcile tax contributions with the tax service.
4. At the same time, the liquidator sends an interim balance sheet to the tax office, which states that the company’s debt amounts to more than 300,000 rubles. Based on this, the liquidator also submits an application to the arbitration court to declare the company bankrupt. He is given no more than ten days for this.
5. After accepting the application, the judge makes a decision to declare the legal entity insolvent. Public bankruptcy proceedings begin and an arbitration manager is appointed. During bankruptcy proceedings, the manager must publish relevant information in the media. Creditors have the authority to bring claims against the debtor within one month. At this time, the arbitration manager conducts an inventory of all the company’s property, returns assets to creditors, collects accounts payable, closes the company’s accounts and draws up reports on his work.
6. Based on the received report, the judicial institution makes a final decision that the bankruptcy process according to the simplified scheme is completed. After which the tax service cancels the entry in the Unified Register of Legal Entities and issues a certificate of liquidation. It is from this date that all the company’s debts are considered closed, which means that it is no longer possible to reclaim them later.

What are the consequences for a citizen of bankruptcy and debt relief?

Declaring a citizen bankrupt and releasing him from debt entails the following adverse consequences (Article 213.30 of the Federal Law “On Insolvency (Bankruptcy)”), which a citizen needs to be aware of:

A.

Within 5 years from the date of completion of the bankruptcy procedure, he has no right to assume obligations under credit agreements and (or) loan agreements without indicating the fact of his bankruptcy.

B.

For 3 years, a citizen has no right to hold positions in the management bodies of a legal entity or otherwise participate in the management of a legal entity.

IN.

For 10 years, he has no right to hold positions in the management bodies of a credit organization or otherwise participate in the management of a credit organization.

G.

For 5 years, he does not have the right to hold positions in the management bodies of an insurance organization, non-state pension fund, management company of an investment fund, mutual investment fund and non-state pension fund or microfinance company, or otherwise participate in the management of such organizations.

In conclusion, I would like to note that this initiative definitely deserves attention and is positive. At the same time, in order to use the procedure, many conditions must be met, which will ultimately seriously limit the number of debtors who could resort to it.

The role of the arbitration manager in the simplified bankruptcy system of an organization

At absolutely all stages of bankruptcy, the arbitration manager is considered an ordinary citizen.

Important! An arbitration manager is a specialist with special knowledge and education. He receives this education through special programs approved at the federal level. Such activities can only be carried out by individual entrepreneurs who are members of an SRO. The manager is appointed by the arbitration court.

Responsibilities of the arbitration manager:

• Protection of enterprise property from unlawful seizure by creditors.
• Maintaining a list of creditors who have put forward their claims against the company’s property.
• Analysis of the financial condition of the enterprise.
• Holding a general meeting with creditors, if necessary.
• Controlling the costs of bankruptcy proceedings.
• Finding signs of bankruptcy that contradict the legislation of the Russian Federation.

Simplified (out-of-court) bankruptcy process

I have already given you detailed instructions on how to collect documents for bankruptcy and how to draw up an application yourself.

Unlike the classical procedure, in simplified out-of-court bankruptcy you do not need a certificate confirming income for the last three years and an extract from the Pension Fund. Otherwise, the process of collecting documents is almost the same.

Stages of simplified bankruptcy:

1. Collecting documents and submitting an application to the SRO;
2. Government payment fees and appointment of financial manager;
3. The manager accepts the application and introduces the procedure;
4. The arbitration manager publishes information about your bankruptcy in the EFRSB and appoints supervision;
5. If within a year none of the creditors have gone to court again and the debtor’s financial situation has not improved, then the citizen is declared bankrupt and his debts are written off.

I would like to pay special attention to the last point; the whole process will last at least a year, while judicial personal bankruptcy is often completed within six months, or even less. Based on the above, the debtor will need to collect documents, prepare an application, draw up a list of creditors and, possibly, independently describe and sell the property.

If the amount of your debts exceeds 500 thousand or you do not qualify for a simplified bankruptcy procedure for other reasons, you can ask our lawyers how to write off your debts with the most minimal financial losses

Powers of participants in the simplified company bankruptcy system

The main participants in the insolvency procedure under the simplified system are:

1. Arbitration manager.
2. The defaulting company.
3. Creditors.
4. Authorized bodies.

The defaulting company has the authority to independently initiate the process of declaring insolvency. To do this, you must submit a corresponding application to the arbitration court. This should be done if the company realizes that it cannot pay off its debt obligations.

Expert opinion

Popov Dmitry Alekseevich

Practicing lawyer with 7 years of experience in banking law

The insolvency practitioner is fully involved in the simplified insolvency procedure. This person has a special status and powers. He undertakes to protect the debtor’s property and analyze the financial position of the company. He must also hold a meeting with creditors, communicate with the arbitration court, involve third parties in the work, and receive remuneration for the work performed.

Creditors are, as a rule, ordinary people or legal entities who have officially confirmed claims against the defaulter. These persons also have the authority to apply to the arbitration court in order to begin proceedings to declare the company insolvency.

Authorized bodies are government agencies that have claims against the debtor for the payment of taxes, fees and charges. Such institutions include: Labor and Tax Inspectorate, Customs Service, Pension Fund, Social Insurance Fund, the body that controls the activities of SROs. The demands of these bodies must be satisfied first.

Documents required for the simplified bankruptcy procedure

In order to submit an application for completion of activities using a simplified form, you must have the following documents:

1. Charter or other constituent document.
2. Registration certificate.
3. TIN.
4. A document confirming the establishment of the company.
5. A document confirming the appointment of management.
6. Liquidation balance sheet with statements of expenses and income.
7. Copies of identification documents of the director, founders and chief accountant.
8. Notifications from the Pension Fund, Social Insurance Fund, Compulsory Medical Insurance Fund and other extra-budgetary structures.
9. Industry statistics codes.

When preparing the process of closing a company, founders need to remember that the law provides for liability for false bankruptcy.

1. Charter or other constituent document. When an organization is created, a Charter is drawn up, which contains the main provisions of the organization’s corporate policy and regulates its activities. In addition to the Charter, another constituent document may be drawn up that has a similar purpose and content.
2. Registration certificate. A document on registration of a legal entity is issued by authorized bodies when creating an organization.
3. TIN. A taxpayer identification number is assigned upon registration with the Federal Tax Service, for which a corresponding document (TIN) is issued.
4. A document confirming the creation of a legal entity. The certificate of establishment of a legal entity contains information about the date of its formation, specifics and other data.
5. Document confirming the appointment of management. The appointment of the company's management must be reflected in the appropriate document, which must contain basic information about these persons.
6. Liquidation balance sheet with statements of company expenses and income. In preparation for the liquidation of an enterprise, reconciliations are carried out and reports are drawn up, which must be documented in accordance with the norms established by law.
7. Copies of identification documents of the director, founders and chief accountant. When submitting documents to the arbitration court to recognize the debtor's insolvency, passports of the responsible persons are required to be presented.
8. Notifications from the Pension Fund, Social Insurance Fund, Compulsory Medical Insurance Fund and other non-budgetary organizations. Participants must notify the Pension Fund, Social Insurance Fund, Compulsory Medical Insurance Fund and other extra-budgetary structures about the decision to liquidate the company.
9. Industry statistics codes. Industry statistics codes (OKVED) mean six-digit digital designations containing information about the scope of activity of a legal entity.

The process of liquidating a company before going to court

Once the start of liquidation has been entered into the Unified Register of Legal Entities, the following steps must begin:

• The liquidator is obliged to publish public information about the commenced bankruptcy procedure in the media. After which creditors have thirty days to file claims against the debtor.
• The liquidation commission of a legal entity independently finds creditors and notifies them of the procedure.
• At the end of the month, an interim balance sheet of the company is formed, which reflects all debts and property.
• The debt settlement process begins. First, this is done at the expense of the company’s funds, and then through the sale of its property. Only after the sale will it become clear whether there are still outstanding debts, since until the sale no one will be able to say how much can be received for the sale.
• If not all claims are satisfied, the insolvency practitioner begins the insolvency process.

The order of debt repayment under a simplified bankruptcy procedure

Settlements with creditors during the process of completing activities occur in the manner prescribed by law, subject to priority.

The rules are the same for both general and simplified liquidation:

1. First of all, settlements are made on the claims of citizens to whom the debtor is liable for causing harm to life or health. Citizens whose lives or health were harmed due to the fault of the debtor have a priority right to payments.
2. Secondly, calculations are made for the payment of severance pay and wages of persons working or working under an employment contract . The next applicants for payment of debts are considered to be company employees with whom the company has concluded employment contracts.
3. Thirdly, settlements are made with other creditors. Finally, settlements are made with creditors according to the register of payment recipients.

How to speed up the process of declaring a company insolvency?

The liquidator himself is unlikely to be able to speed up the bankruptcy procedure. Before the start of the property sale process, he does not know whether the company meets the criteria for insolvency. But the liquidation commission has the right to file an application in the general manner, citing the reasons for the exact bankruptcy. In this case, insolvency will also follow the general pattern.

The application can also be submitted by the creditor himself. But here there are ambiguous points:

1. Some courts, having learned about the liquidation of a company from the Unified State Register of Legal Entities, automatically transfer the insolvency process to a simplified scheme.
2. Some judicial institutions try not to apply the simplified bankruptcy system if at this time the creditor files a corresponding petition.

Conditions for implementing the procedure

The first step when considering a bill is to understand what the conditions for applying the simplified bankruptcy procedure are. The bill provides a clear answer to the question posed.

In the current version of the document, the debtor receives the right to apply a simplified bankruptcy procedure if the following conditions are met:

• amount of debt - from 50 thousand to 700 thousand rubles (it is important to note that the indicated amount of debt - 700 thousand rubles - is the maximum for simplified bankruptcy);
• no more than a quarter of financial obligations arose in the last six months;
• the number of creditors does not exceed 10;
• the debtor has not been declared bankrupt before or was declared bankrupt more than 5 years ago;
• in the last year before filing for bankruptcy, the individual did not carry out any of the following transactions: donation of property worth more than 200 thousand rubles. or sale of property in the amount of 2 million rubles;
• the total value of the debtor's assets is no more than half a million rubles, excluding the only home;
• the applicant has not changed his last name in the last 6 months;
• he has no outstanding conviction for economic crimes.

The debtor's creditors can also initiate the event. The condition for launching a simplified bankruptcy procedure in this case: the amount of debt is from half a million to 700 thousand rubles and the delay in payments is from 3 months.

An important innovation of the bill was the refusal to involve an arbitration manager in the procedure. But the latest amendments made by legislators still require the participation of a specialist, although his role in the case will be noticeably reduced.

For example, the debtor himself will deal with the sale of property. The functions of the manager need to be considered in more detail after the law takes its final form.

Rights of the bankruptcy trustee

At the stage of bankruptcy proceedings, a bankruptcy trustee is always appointed. Its functions:

• Submit information about the defaulter to the bankruptcy register. This must be done within ten days from the date of appointment.
• Accept from the company management all necessary documentation, seals and information about its property. An inventory must be taken within three months.
• Call an appraiser who can determine the value of the company's property.
• Keep all assets of the enterprise.
• Deal with the recovery of funds from debtors.
• Represent the rights and interests of the defaulter in court.

Who is the out-of-court procedure suitable for?

As originally intended, the out-of-court procedure is suitable for citizens:

• With debts that have already been settled and for which enforcement proceedings have been completed (more than 2 years old).
• From the moment the debt was formed to the present moment, those who have not carried out transactions with property, including formal ones.
• Who know all their creditors and can document the amount of remaining debt under each agreement;
• Those who are unable to improve their financial situation due to age, health or other reasons.

In this case, the extrajudicial bankruptcy procedure has every chance of ending in the release of the debtor from fulfilling financial obligations.

Trading in a simplified insolvency system

In order to cover at least part of the debts, it is necessary to go through the stage of selling the property of the enterprise. As a rule, the sale of assets takes place at public auction. All interested persons can participate in them, with a few exceptions. Restrictions on participation in auctions may apply if property that does not have free circulation is sold during the auction. For example, jewelry and weapons.

Note! The winner of the public auction is the person who offered the highest price. Absolutely any person or organization can be a participant here. To do this, you need to register on the online platform and submit an application for participation on time. The arbitration manager organizes the auction.

The bidding process in the simplified system is strictly regulated and consists of the following stages:

1. Primary trades. Here all participants can play to increase the value of the property. The step size is determined in advance.
2. Repeated bidding. They are held if the first auction is declared invalid. Here the value of the property is reduced by ten percent.
3. Public bidding. This stage begins when the first two have not brought results. Its peculiarity is a decrease in cost at certain intervals. This stage is attractive because bidders can buy property at a very low price, sometimes discounts reach up to 99%.

Nuances of a simplified system of insolvency of an organization

The main advantage is that it allows you to greatly reduce the time required for the bankruptcy process and reduce the costs of it. Let's highlight the important features of the simplified scheme:

• Reducing the time it takes to liquidate a company (on average it takes from four to twelve months). In the standard scheme, the terms can be extended over years.
• The influence of outsiders is excluded, since the interests of the defaulter are represented here by the liquidator, arbitration and bankruptcy manager.
• Saving money for the owners of the organization. On average, from 200,000 to 300,000 rubles are spent on this procedure. This is due to the fact that the work time of the arbitration manager is reduced.
• Bankruptcy proceedings are the only stage that a company goes through. All other stages, such as observation, recovery and external influence, are absent here.