Bankruptcy

Bankruptcy is the inability of a debtor (individual or legal entity) to fulfill its financial obligations to creditors due to a lack of assets, recognized by an authorized body (commercial court).

In other words, it is a legally formalized insolvency, when the entity cannot settle its debt obligations after using all possible means of restoring solvency, including debt restructuring or restructuring.

Signs and grounds of bankruptcy

Determining signs of potential bankruptcy for individuals and legal entities is a key step in detecting insolvency. Tracking such signs can reveal a situation that requires attention and possible measures to solve financial problems. It is important to understand that the given signs are only a guideline, and the detection of at least one of them can be the basis for considering the bankruptcy procedure in accordance with current legislation.

For legal entities:

1. Late payments: Delayed payments to suppliers, creditors, as well as delays in the payment of wages to employees can indicate financial difficulties.
2. Declining Sales: If a company is experiencing a decline in sales or services, this may indicate stability issues.
3. Debt burden: Growing debt burden and inability to pay it can lead to financial difficulties.
4. Insufficient liquidity: If there are not enough funds to cover current expenses, this may indicate a problem with cash flow management.
5. Loss of key counterparties: This can lead to loss of profits and deterioration of the company's financial condition.

For individuals, similar signs can be found in personal finances and relationships with creditors.

The bankruptcy procedure of an individual

The process of bankruptcy of an individual is initiated by submitting a petition to the commercial court. If there are legal grounds, the court starts proceedings in the case and appoints an arbitration administrator to carry out the procedure.

At the preparatory stage, the regime of restructuring the debtor's debt obligations is introduced. The arbitration manager forms a register of creditors' claims and develops a plan for debt restructuring, specifying the terms and order of their repayment.

In the case of an unsuccessful attempt to restructure debts, a transition to the procedure of realization of the debtor's property assets takes place for the purpose of settlements with creditors according to their requirements.

After the implementation of the debt restructuring plan or the sale of property, the final stage of the proceedings in the case comes.

The main goal of the bankruptcy procedure of a natural person is to restore his solvency as much as possible or, if this is impossible, to release him from debt obligations in accordance with current legislation.

Bankruptcy procedure of a legal entity

The procedure begins with the submission of an application for insolvency to the commercial court. If there are grounds, the court opens proceedings in the case and introduces a moratorium on meeting creditors' demands.

An arbitration administrator is appointed, who takes inventory of the debtor's property, analyzes his financial condition and compiles a register of creditors' claims.

Next, a decision is made on rehabilitation (restoration of solvency) or liquidation of the debtor. In the case of remediation, an appropriate plan of measures is approved, otherwise the property is subject to sale for settlements with creditors.

At the end, the court declares the company bankrupt and orders its liquidation or terminates the procedure due to the fulfillment of the debtor's obligations.

Consequences of bankruptcy

Both for individuals and for legal entities, the consequences of bankruptcy are significant.

In the first case:

1. Official declaration of bankruptcy.
2. Prohibition to initiate new proceedings for 5 years.
3. Lack of "impeccable reputation" for 3 years.
4. Bankruptcy record in credit history.
5. Obligation to inform counterparties within 5 years.

In the second:

1. Liquidation is possible by court decision.
2. Carrying out liquidation procedures (inventory, sale of property, settlements).
3. Exclusion from the Unified State Register.
4. Reputational losses, image deterioration.

Therefore, bankruptcy is an important legal procedure that helps to resolve financial problems, but it entails certain legal and organizational consequences that must be taken into account.

How much does the bankruptcy procedure cost?

The cost of bankruptcy proceedings can vary significantly depending on various factors, such as the amount of debts, the number of creditors, the complexity of the case, and other factors.

For legal entities, costs include the arbitration administrator's fee, court fees for creditors, possible costs for experts and other representatives. In the case of natural persons - advance remuneration of the arbitration administrator, legal support and state duty.

However, the exact costs will be determined only after consulting with lawyers and analyzing your specific situation. Our experts are ready to make an individual calculation of the costs of the bankruptcy procedure for your case after receiving all the necessary information. Contact us for a consultation and we will provide you with detailed information on the cost of the procedure and all possible expenses.

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Contact our experienced bankruptcy lawyers today and receive a detailed analysis of your issue with an individual calculation of the costs of conducting the bankruptcy procedure.

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