Legal support of the bankruptcy procedure

Legal Support for Bankruptcy Proceedings

The lawyer’s role depends on whom they represent: the debtor company, the business owner, the director, or a creditor. Each party has different risks and objectives, so there is no universal support scenario. Legal assistance may include:

• analysis of the company’s financial condition;
• review of debts and creditors’ claims;
• analysis of assets and accounts receivable;
• review of enforcement proceedings;
• analysis of contracts and previous transactions involving property;
• preparation of applications and procedural documents;
• representation before the commercial court;
• work with creditors’ claims;
• cooperation with the insolvency practitioner;
• support during rehabilitation or liquidation proceedings.

For the debtor company, legal support helps assess whether solvency can be restored, what consequences the opening of bankruptcy proceedings may have, and how the company’s director and owners should act. For business owners and management, it is important to understand the risks associated with the company’s previous activities, transfers of assets, settlements with individual creditors, and management decisions. For creditors, a lawyer helps substantiate claims, submit them in due time, participate in the proceedings, and protect their interests in the distribution of the debtor’s assets.

The earlier the legal analysis is conducted, the more opportunities there are to assess risks, review company transactions, and prepare a legal position before the active stage of court proceedings begins.

When a Bankruptcy Lawyer Is Needed

It is advisable to seek legal support if:

• the company can no longer meet its current monetary obligations;
• there is significant debt to several creditors;
• creditors have already filed claims in court;
• enforcement proceedings have been opened;
• there is a risk of losing assets;
• company property is pledged or otherwise secured;
• a creditor is planning to initiate bankruptcy proceedings against the debtor;
• the possibility of rehabilitation needs to be assessed;
• bankruptcy proceedings have already been opened;
• the interests of an owner, director, or creditor need to be protected.

Benefits of Working with Prikhodko & Partners

We help:

• conduct a preliminary risk assessment — we evaluate debts, assets, creditors, and court proceedings;
• review the company’s previous transactions involving property and individual creditors;
• determine the procedural strategy based on the interests of the specific client;
• prepare applications and procedural documents;
• represent interests before the commercial court;
• work with creditors’ claims and objections;
• support cooperation with the insolvency practitioner;
• provide legal assistance during rehabilitation and liquidation stages.

Preliminary Analysis Before Bankruptcy

The lawyer reviews:

• the overall debt structure;
• the number and claims of creditors;
• the company’s property;
• accounts receivable;
• bank accounts;
• enforcement proceedings;
• active contracts;
• court disputes;
• transactions involving assets during previous periods;
• settlements with individual creditors;
• financial and accounting documentation.

After that, it is determined whether bankruptcy is in the client’s interests and which scenario should be prepared. In some situations, the main task will be to open bankruptcy proceedings. In others, it may be appropriate to assess rehabilitation, negotiations with creditors, or other ways to restore solvency.

Documents Required for Legal Support in Bankruptcy

The following documents may be required:

• the company’s incorporation documents;
• financial and accounting statements;
• loan agreements;
• contracts with counterparties;
• information about creditors;
• documents confirming debts;
• information about accounts receivable;
• documents relating to movable and immovable property;
• information about pledges and other encumbrances;
• court decisions;
• enforcement proceeding documents;
• banking documents;
• documents relating to asset transactions;
• other materials depending on the circumstances of the case.

The lawyer not only collects documents but also verifies whether information about debts, assets, and the company’s financial condition is consistent.

Representation in Court in Bankruptcy Proceedings

The lawyer:

• prepares applications, motions, and objections;
• represents the client in court hearings;
• analyzes the positions of other participants in the case;
• reviews evidence and creditors’ claims;
• responds to procedural risks;
• appeals court decisions where there are legal grounds;
• monitors compliance with the client’s rights at the relevant stage of the procedure.

In bankruptcy proceedings, it is important to assess not an individual court hearing, but the overall impact of each procedural decision on the further course of the case.

Lawyer and Insolvency Practitioner

The insolvency practitioner is a separate participant in the bankruptcy procedure. Depending on the stage of the case, they may act as a property administrator, rehabilitation manager, or liquidator. The client’s lawyer does not replace the insolvency practitioner. The lawyer’s task is to represent and protect the interests of a particular party. Legal support in this area may include:

• analysis of the insolvency practitioner’s actions;
• preparation of applications, submissions, and objections;
• participation in communication with the insolvency practitioner;
• monitoring issues affecting the client’s rights;
• challenging actions or decisions where there are legal grounds.

Work with Creditors’ Claims

For a creditor, it is important to properly substantiate:

• the legal basis on which the debt arose;
• the amount of the claim;
• the date when the obligation arose;
• the existence of court decisions;
• whether the obligation is secured by pledge or another method;
• interest, penalties, and other components of the claim;
• documents confirming the amount claimed.

For the debtor, on the contrary, it is important to review submitted claims and prevent unjustified or incorrectly calculated debts from being included in the register. That is why a lawyer analyzes each disputed claim separately and prepares objections where necessary.

Legal Support for Corporate Rehabilitation

Rehabilitation may be applied if there are conditions for continuing the company’s operations and restoring its financial condition. Its purpose is to restore the company’s solvency and settle creditors’ claims. Legal support may include:

• assessment of the possibility of rehabilitation;
• legal review of the proposed plan;
• work with creditors;
• analysis of the conditions required to restore solvency;
• preparation of procedural documents;
• representation of the client’s interests in court;
• support for individual measures within the procedure.

For business owners, this is an opportunity to assess whether the company has real potential for recovery before moving to liquidation.

Legal Support During Liquidation Proceedings

If solvency cannot be restored and the company is declared bankrupt, the case may proceed to liquidation. At this stage, particular importance is attached to:

• formation of the liquidation estate;
• analysis and sale of assets;
• claims of secured creditors;
• priority of satisfaction of claims;
• property disputes;
• challenging individual transactions;
• settlements with creditors;
• completion of the bankruptcy procedure.

The lawyer monitors legal issues affecting the client’s interests and responds to procedural risks arising during liquidation.

Risks Related to Previous Company Transactions

Particular attention should be paid to:

• sale of assets before bankruptcy;
• transfer of property to related parties;
• settlements with individual creditors;
• contracts concluded at prices significantly different from market value;
• disposal of pledged property;
• transactions that affected the company’s solvency;
• actions of management during a period of financial distress.

Therefore, business owners and directors should not wait until the case is already before the court. A preliminary analysis makes it possible to identify problematic transactions in advance and prepare a legal position regarding them.

Cost of Legal Support for Bankruptcy

The price is affected by:

• the stage of the procedure;
• the company’s financial condition;
• the number of creditors;
• the amount and structure of debt;
• the number of assets;
• the existence of pledged property;
• the number of court disputes;
• the existence of enforcement proceedings;
• the volume of documents;
• the need to participate in rehabilitation or liquidation;
• the scope of court representation.

After the initial analysis, the lawyer determines the scope of work required in your specific situation and which stages should be included in the legal support.

Common Situations Requiring Legal Support in Bankruptcy

Conclusion

Legal support for bankruptcy proceedings makes it possible to assess the company’s financial and legal risks in advance, prepare documents, and develop a position based on the interests of the specific party. For the debtor, this may involve protecting the business, assessing the possibility of rehabilitation, or supporting liquidation. For the creditor, it involves properly substantiating claims and participating in the distribution of assets. The earlier the legal analysis begins, the more opportunities there are to take risks into account before key procedural decisions are made.

Is your company struggling with debt or already involved in bankruptcy proceedings? Submit a request on the Prikhodko & Partners Law Firm website. A lawyer will analyze the financial and legal situation and propose a strategy for further action.