Sanitation of the debtor in bankruptcy cases

Reorganization of the debtor is a system of measures applied in a bankruptcy case with the aim of restoring the debtor’s solvency and repaying his debts to creditors.

The main goal of rehabilitation is to prevent the liquidation of the debtor legal entity and to ensure the ability to repay debts and continue operations.

When can the rehabilitation procedure be implemented?

There are two ways of introducing the debtor’s rehabilitation procedure – before and after the start of the bankruptcy process. Sanitation can be started at the stage when the debtor has not yet been formally recognized as bankrupt and the bankruptcy case has not been initiated. Also, rehabilitation is possible already after the official bankruptcy procedure of the debtor has been initiated. That is, there is flexibility in choosing the time of the start of health activities.

• Initiation of rehabilitation before the opening of bankruptcy proceedings gives the debtor the opportunity to independently develop and implement rehabilitation measures at an early stage of financial difficulties, without waiting for official recognition of bankruptcy.

To obtain consent for such pre-trial rehabilitation, the debtor must submit a package of documents to the state privatization body, which includes: a plan of measures in the prescribed form; data on signs of bankruptcy; information on funding sources; list of creditors; decision of the founders; founding and financial materials; liquidation and financial analysis of the enterprise. This will allow you to get preliminary approval of the reorganization and avoid delays after the official bankruptcy.

• In contrast to pre-trial rehabilitation, the implementation of rehabilitation measures after the opening of bankruptcy proceedings is under the control of the appointed receiver. It is the administrator who analyzes the debtor’s financial situation, develops a rehabilitation plan and organizes its implementation after approval by the commercial court.

In order to obtain the conclusion of the state privatization body regarding the rehabilitation plan already after the opening of the proceedings, the manager must submit: the plan itself in the proper form; copies of the founding documents of the debtor; a copy of the manager’s license; financial statements for recent years. In this way, proper control of the procedure by authorized persons and bodies after official bankruptcy is ensured.

The rehabilitation procedure can be applied at various stages of bankruptcy proceedings, but the goal remains to restore the debtor’s solvency.

Advantages of rehabilitation

Reorganization of the debtor has a number of advantages, in particular:

• Restoration of solvency and avoidance of liquidation of the debtor. Sanitation gives the debtor a chance to continue his activities.
• An opportunity for creditors to receive repayment of debts in whole or in part. Without rehabilitation, creditors may get nothing.
• Preservation of jobs and social stability. Sanitation makes it possible to avoid mass dismissal of the debtor’s employees.

How to arrange everything correctly?

Debtor rehabilitation is a complex process of financial rehabilitation of a loss-making enterprise, which requires high professionalism.

Law firm “Prykhodko and partners” – leading experts in the field of remediation with many years of experience. We provide a comprehensive approach:

• Preparation of all necessary documents by highly qualified lawyers.
• Legal support and representation of interests at all stages of the rehabilitation procedure.
• Interaction with creditors, investors, state bodies to achieve the maximum result.
• Guarantee of high-quality legal service and successful completion of the case.

Choose a proven team of professionals – “Prykhodko and Partners”. Together we will overcome the crisis and restore business!