0
The crisis that came in 2021 has put all small and medium-sized businesses at risk, so most of its owners do not expect work to be restored.
Now the more pressing task for them is the ability to repay their losses, the size of which has increased several times due to the lack of profit.
Lawyers will talk about an acceptable way out of this situation - bankruptcy of an individual entrepreneur with debts.
Closing an individual entrepreneur: bankruptcy
You can close an individual entrepreneur quite simply by submitting a standard application to the tax authority. If business activity is not very successful, then it is necessary to initiate bankruptcy proceedings. In some cases, declaring oneself bankrupt is the only way out for an entrepreneur. This is relevant if the individual entrepreneur has debts to a banking organization that the business owner cannot pay due to lack of funds. Bankruptcy applications are accepted by the arbitration court. The initiator of the procedure can be either the business owner himself or his creditor.
Personal bankruptcy application
An application for bankruptcy of an individual entrepreneur is submitted to the arbitration court:
- by the entrepreneur himself;
- his creditor.
An entrepreneur has the opportunity to initiate the procedure himself, but not all business owners are ready to admit their insolvency. If a businessman is two weeks (14 days) late in paying his bills, his creditor can go to court himself. To do this, you need to fill out an application in the prescribed form. A sample application can be found freely available on the Internet.
Grounds for bankruptcy and conditions for going to court
The initiator of the bankruptcy procedure can be a bankruptcy creditor, an official representative of an authorized government body and an individual entrepreneur. Applying to an arbitration court requires competently filling out an application according to a generally accepted template and providing accessible documentary evidence indicating the presence of signs of bankruptcy of an individual entrepreneur.
The Bankruptcy Law defines the following grounds for recognizing the insolvency of an individual entrepreneur:
1. Inability to fulfill earlier financial obligations to make regular payments.
2. The amount of the total debt is more than half a million rubles minus fines and penalties.
3. Ignoring requirements to make regular payments for three or more months.
Important! Firstly, before transferring the case materials to the court, the creditor is not obliged to warn about his intention.
Secondly, the amount of debt of an individual entrepreneur may include obligations that are in no way related to the conduct of previously organized business activities.
Thirdly, when exercising the acquired right of the defaulter to independently declare bankruptcy, the size of any previously unfulfilled obligations does not matter at all. The validity of the application in this case is assessed by the court taking into account the accompanying information about the current solvency of the citizen.
Violations when submitting documents will cause the application to be stopped without progress. The lack of evidence will lead to the procedure being declared unfounded, followed by refusal to further consider the case materials.
LEGAL CONSULTATION
Did not find an answer to your question? Call the hotline ext. 761. It's FREE!
How to file bankruptcy for an individual entrepreneur
To file bankruptcy for an individual entrepreneur, you must fill out an application and submit documents to the arbitration court at the place of residence of the entrepreneur. In this case, you must comply with a number of rules prescribed in Art. 27 and 33 of the Arbitration Procedure Code. These types of statements are subject to the same requirements as standard statements of claim. The content of the application largely depends on who exactly is submitting the document: the entrepreneur himself or the financial organization (creditor). If the application is completed incorrectly, it will be returned with all the documents that were attached. In this case, the application can be resubmitted later.
Features of individual entrepreneur bankruptcy
Bankruptcy of an individual entrepreneur is a simpler procedure compared to bankruptcy of legal entities. The process is simplified for the simple reason that the individual entrepreneur is an individual. An entrepreneur, when closing an individual entrepreneur, can submit an application to the arbitration court himself, drawing it up in accordance with the rules prescribed in the articles of the Arbitration Code of the Russian Federation. The court's decision becomes known within five days from the date of filing the application. If the document was drawn up incorrectly, it will have to be rewritten. The entrepreneur's creditor also has the right to initiate bankruptcy proceedings. In this case, the statement will look different.
Closing an individual entrepreneur confirms the lack of income
When a person closes an individual entrepreneur and registers with the employment center, he officially loses income. Since there is no income, a restructuring plan cannot be proposed. The entrepreneur will not have to pay off debts for three years. The only radical measure left is to sell the businessman’s property, if any, at auction.
Simple online accounting for entrepreneurs
The service will replace your accountant and help you save money. Elba will prepare the reports herself and send them via the Internet. It will calculate taxes, help prepare documents for transactions and will not require special knowledge.
Try 30 days free Gift for new entrepreneurs The promotion is valid for individual entrepreneurs under 3 months old
Bankruptcy procedure for individual entrepreneurs
The bankruptcy procedure for an individual entrepreneur can be initiated by the entrepreneur himself or his creditor. The creditor should know that filing an application with the Arbitration Court is useless if the entrepreneur has already lost his status as an individual entrepreneur. In this case, the document will be returned to the plaintiff. If the entrepreneur has retained his status at the time of filing the application, then the documents are reviewed by the Arbitration Court within five days, after which a decision is made on the case. By law, the entrepreneur himself is obliged to file a bankruptcy petition with the court if he cannot pay bills and cannot cope with debts. When a business owner goes to court himself, he incurs fewer costs.
Bankruptcy of an individual
The law does not prohibit you from terminating your status as an individual entrepreneur and paying debts, including taxes and fees, as an individual. If, of course, you are happy with this option.
You have the right to submit an application to the tax office at the place of your registration to terminate your activities as an individual entrepreneur. After cessation of activity as an individual entrepreneur, the responsibility for repaying the debt will fall on you as an individual.
If you suddenly asked the question: “What’s the point of transferring a debt from an individual entrepreneur to an individual if you still don’t have money or property that can be foreclosed on by law?”, then we’ll explain.
The bankruptcy court procedure is paid for people with the status of individual entrepreneurs. Of course, this is if you are a conscientious entrepreneur and decided to file a corresponding application with the arbitration court at the moment as soon as you felt that you were unable to pay off your debts.
By law, this period should not exceed thirty working days.
If your creditors (claimors) go to the arbitration court, they pay (as they say, whoever dines the girl, dances her).
In case of bankruptcy as an individual, you have the right to use an out-of-court bankruptcy procedure by submitting an appropriate application to the MFC “My Documents”.
Does this mean that, in an amicable way, we first need to get rid of the individual entrepreneur status? Yes.
The bankruptcy procedure through the MFC occurs without charging a fee to the applicant, that is, you, however, it has a number of restrictions, the main of which are:
- The amount of debt should not exceed five hundred thousand rubles;
- You must have no property that can be foreclosed on by law.
This fact must be confirmed by the bailiff service, and not by your assurances, promises, oaths, etc., because the state does not have much confidence in you on such a delicate issue!
The current legislation does not provide for restrictions on the re-registration of a citizen as an individual entrepreneur after the bankruptcy of an individual.
In other words, after declaring yourself bankrupt as an individual, you have the right to register again as an individual entrepreneur. And try to start your own business again.
Consequences of bankruptcy of individual entrepreneurs
When the court decision is announced, the so-called bankruptcy proceedings begin. The consequences of bankruptcy for an entrepreneur can be different:
- an entrepreneur may lose the right to restore an individual entrepreneur for up to 12 months;
- the businessman’s license may be temporarily suspended;
- the court has the right to demand payment of fines and other monetary payments;
- From the moment of bankruptcy, the accrual of interest on the debt amount ceases.
Often it is much more profitable for the creditor to settle with the businessman. An entrepreneur, on the verge of bankruptcy, usually simply does not have the funds to pay court costs. These costs will have to be covered by the lender.
How much does bankruptcy cost?
The cost of individual entrepreneur bankruptcy depends on the goals pursued by the initiator of the procedure. Prices range from 15 thousand to 1 million rubles. When setting prices for services, companies focus on the amount of work to be done. It is more profitable for an entrepreneur to initiate bankruptcy proceedings first, because in this situation he will be able to independently choose an arbitration manager. The cost of services can be calculated by multiplying monthly expenses by the number of months during which the business will be conducted. To this amount you must also add current bankruptcy expenses.
Stages of individual entrepreneur bankruptcy
The first stage in the bankruptcy of an individual entrepreneur is observation. During this period, the IP papers are analyzed by a competent specialist. It also determines the financial condition of the entrepreneur. When the procedure is completed, the results of the observation are submitted to the court. The court may make a decision on reorganization or bankruptcy proceedings. The reorganization procedure involves additional cash injections from creditors. It is carried out exclusively with the consent of capital holders. If it was decided to conduct bankruptcy proceedings, then the entrepreneur’s property is confiscated and sold. True, the list of values for implementation is limited.
Distinctive features of individual entrepreneur bankruptcy
The recognition of financial insolvency of individual entrepreneurs is regulated together with bankruptcy of individuals (hereinafter referred to as FL), but has several distinctive characteristics. For example, at the stage of selling property, you can expand the list of things suitable for sale. The consequences also vary, as entrepreneurs face many additional restrictions after officially receiving bankruptcy status.
Since it is impossible to simultaneously conduct bankruptcy proceedings against a person for individual entrepreneurs and individual entrepreneurs, sometimes the procedure is considered as one of the levers of influence on creditors. The defaulter can personally choose the appropriate option for recognizing his insolvency. An entrepreneur who is ahead of the creditor by initiating the bankruptcy process of a private individual can benefit from the chosen procedure.
Important! If the debtor plans to engage in entrepreneurial activity in the near future, qualified lawyers recommend abandoning the procedure for judicial recognition of the insolvency of an individual entrepreneur. In addition, when selling shared ownership at public auction, the entrepreneur loses the primary right of redemption.
Grounds for declaring an individual entrepreneur bankrupt
The grounds for declaring an individual entrepreneur bankrupt are regulated and specified in the Federal Law on Bankruptcy. In fact, an individual entrepreneur can consider himself bankrupt; the same assessment is rightly given by his creditors, if the individual cannot make the obligations assumed under the loan agreement regarding the timely payment of payments. There is a fact of delay, any payments are missing. Additionally, the individual entrepreneur does not have the funds to repay the main debts to the state (taxes, mandatory contributions).
In court, the issue of assigning bankrupt status to an individual entrepreneur is resolved on the basis of an application submitted from the main creditor or directly from the debtor in the prescribed form. The request is accompanied by the provision of supporting documents, reports, certificates, and other documents required by the court. Based on factors that aggravate the borrower’s situation (the inability to conduct business after selling his property to cover the debt to creditors, insufficient proceeds to pay debts, the inability to make mandatory payments after repaying the loan), decisions are made on bankruptcy of the individual entrepreneur.
It is easier for an individual to reach the limit - 500 thousand ₽ debt
A citizen can go bankrupt regardless of the status of the entrepreneur. The nature of the debts does not matter: they can be either personal or commercial. The main thing is that there are grounds for filing an application: the amount of debt is from 500 thousand rubles and there is a delay of 90 days or an understanding that it is impossible to pay off creditors.
When going bankrupt as an individual entrepreneur, a limitation appears: only commercial debts are taken into account. If an entrepreneur took out a consumer loan, as often happens, it no longer counts. If you have accumulated debts on renting an apartment and utility bills, too. Therefore, the limit of 500 thousand ₽ becomes unattainable.
Bankruptcy with an unclosed individual entrepreneur does not provide any advantages. Personal debt creditors will still be involved in the case. They are indicated in the list of creditors and debtors, which the individual entrepreneur submits to the court along with the application.
Who can initiate bankruptcy of an individual entrepreneur
The Bankruptcy Law defines the grounds for declaring an entrepreneur bankrupt and describes who can initiate bankruptcy of an individual entrepreneur. The initiators are always interested parties, who in the bankruptcy case of an individual entrepreneur are one or more banks or other creditors who have not received due payments with the interest specified in the agreement for more than three months. An economic entity itself can also file an application for declaring itself bankrupt if it sees no other possibility of debt restructuring.
Participants may also include representatives of local or state authorities. It should be understood that during the process the rights and demands of all parties: the debtor, creditors and the state must be satisfied to the maximum extent possible.
Legal regulation of bankruptcy of individual entrepreneurs
Regulation of all issues and features of the procedure at the federal level is carried out through Federal Law No. 127, which underwent major changes in 2015. New provisions that came into force several years ago are designed to simultaneously regulate the process of bankruptcy of citizens and individual entrepreneurs (IP). The new version of the law assumes that if any debtor has the appropriate status, only one case is initiated, in which all creditors put forward their claims against the entrepreneur. The situation with the simultaneous consideration of several bankruptcy cases is not allowed by law. Even if some of the creditors have no claims against the debtor, they are required to take part in the planned procedure, since otherwise any financial obligations to these persons will be automatically written off by the court.
Documents required to initiate a case
The documents required to initiate a bankruptcy case for an individual entrepreneur contain a long list, which is based on a corresponding application with a request to declare a person bankrupt from an individual entrepreneur or other parties designated in the law as having such a right.
List: documents confirming the registration and activities of individual entrepreneurs, a list of creditor companies and individuals with attached agreements or debt receipts including repayment schedules, copies of certificates of ownership of real estate, certificates of all types of financial income, marital status, presence of children, etc. existing obligations, list and inventory of property. In particular, any additional statements proving the debtor’s inability to provide for the accumulated amount of debt will help in the outcome of the case.
Debt repayment plan
A debt repayment plan may be attached to the list of documents provided for the trial, which are the basis for declaring an individual entrepreneur bankrupt. The presence of such a document indicates a search for rational ways to resolve the issue of debt restructuring amicably. The plan is a tabular or graphical material for the uniform repayment of debt to credit institutions, drawn up on the basis of the current financial capabilities of the debtor. It must contain a column about the remaining funds for the debtor’s life and the maintenance of his family. If the court approves this option for repaying the debt, the case will be postponed for 3 months.
In the absence of a debt repayment plan, the court may propose its own debt restructuring schedule based on available income. If there is no possibility of paying off debts, the individual entrepreneur is declared bankrupt. In this case, the debts will be listed in order of importance and in the shares specified in the decision of the arbitration court.
Russian bankruptcy legislation
Russian bankruptcy legislation is represented by the main legislative act - Federal Law No. 127 “On Insolvency (Bankruptcy)”. The law does not provide for confirmation of the bankruptcy status of individuals and companies, but for the implementation of various measures to bring entities out of a crisis, restore solvency, and find ways to help pay off accumulated debts.
In a number of cases, when the debtor’s insolvency is confirmed and there is no other way, such as writing off the debt and selling the property, the Arbitration Court still declares the person bankrupt. The law must ensure that the interests of all parties to the process are fulfilled equally. A borrower at the stage of clarifying bankruptcy or already declared bankrupt is not left without housing; the payments withdrawn from him are funds that remain for the use of him and his family after subtracting living expenses. Creditors have the opportunity to repay debts through a debt restructuring procedure; if this is not possible, they can use funds received from the sale of the debtor’s property at auction.
LEGAL REGULATION OF BANKRUPTCY OF INDIVIDUALS UNDER THE LEGISLATION OF THE RUSSIAN FEDERATION
Organizational and legal measures to protect the rights and legitimate interests of participants in economic transactions play an increasingly important, in fact key, role in the mechanism of development of the banking system, financial market and the economy of the Russian Federation as a whole as a social state.
In Russia, there have been conversations for quite some time about the need to expand the institution of insolvency of individuals and introduce the so-called consumer bankruptcy101. Despite the fact that the legislation of most countries provides for rules on bankruptcy of individual consumers, the resolution of this issue in the Russian Federation has been postponed again and again. It is no coincidence that in this regard, quite often in periodical literature opinions are expressed about the need for a certain formalization of the insolvency procedure for citizens102.
It should be noted that there is a lack of experience in domestic legal regulation of such procedures in practice. Historical legal monuments indicate the absence in Russian legislation of a system of norms regulating relations of insolvency, limited to only the rudiments of the relevant provisions. Thus, the Russian Pravda, the Pskov Judgment Charter, the Code of Laws of 1497 and 1550, and the Council Code of 1649 separated guilty and innocent bankruptcy and determined the advantages in satisfying the claims of creditors.
Legislative regulation of insolvency (bankruptcy) of individuals is a complex of legislative acts103, the basis of which is Art. 25 of the Civil Code of the Russian Federation, which directly regulates the insolvency (bankruptcy) of individual entrepreneurs. The system of legal regulation of insolvency (bankruptcy) is represented by the Federal Law “On Insolvency (Bankruptcy)104, which basically contains requirements, on the one hand, excluding insolvent entities, and on the other hand, providing the opportunity for bona fide participants in legal relations to achieve financial stability, thereby guaranteeing social justice regulated by the norms of constitutional law.
This stage of Russian legislation is laid down by the Federal Law of December 29, 2014 No. 476-FZ “On Amendments to the Federal Law “On Insolvency (Bankruptcy)” and certain legislative acts of the Russian Federation regarding the regulation of rehabilitation procedures applied to a citizen-debtor.” Even before this law came into force, the Federal Law of June 29, 2015 No. 154-FZ “On resolving the peculiarities of insolvency (bankruptcy) in the territories of the Republic of Crimea and the federal city of Sevastopol and on introducing amendments to certain legislative acts of the Russian Federation”105 .
Thus, the system of legal regulation of bankruptcy relations for citizens is quite complex, it mainly includes two groups of issues: issues of interpretation of the new Chapter X of Federal Law No. 127-FZ and issues of law enforcement.
According to V.F. Popandopulo and E.V. Slepchenko, it can be improved by: a) concentrating all the features of bankruptcy of individual entrepreneurs in paragraph 2 of Chapter X of the bankruptcy law; b) extending general provisions on bankruptcy of citizens and special provisions on bankruptcy of individual entrepreneurs to the bankruptcy relations of farms; c) transfer of provisions on the bankruptcy of a citizen in the event of his death, which are common for cases of bankruptcy of citizens, in paragraph 1.1 of Chapter X of the bankruptcy law106.
100 Andreev S.E., Vitryansky V.V., Denisov S.A. etc. Scientific and practical commentary on the Federal Law “On Insolvency (Bankruptcy)” (article-by-article) / ed. V.V. Vitryansky. M.: Statute, 2003; Popov E.Yu. Formation of the civil law institution of bankruptcy of individuals in the Russian Federation: abstract of thesis. Ph.D. legal Sci. – Volgograd, 2012, etc.
101 See in more detail: Construction and housing law: textbook / ed. N.M. Konovalova, V.K. Pisarenko, A.L. Shilovskaya - M.: Moscow State. acad. communal services and construction, 2010. pp. 56–58; Sitdikova L.B. Theoretical and practical problems of legal
regulation of information and consulting services in civil law of Russia - M.: IG "Lawyer". P.45; Starodumova S.Yu. The concept of real estate in civil law // Legal world. 2015. No. 5. P. 42-45.
102 Federal Law of February 25, 1999 No. 40-FZ “On the Insolvency (Bankruptcy) of Credit Institutions” // Collection of Legislation of the Russian Federation. 1999. No. 9. Art. 1097 (from last change); Decree of the Government of the Russian Federation of February 3, 2005 No. 52 “On the regulatory body exercising control over the activities of self-regulatory organizations of arbitration managers” // Collection of legislation of the Russian Federation. 2005. No. 6. Article 464.
103 Collection of legislation of the Russian Federation. 2002. No. 43. Article 4190 (as amended on January 1, 2021)
104 Collection of legislation of the Russian Federation. 2015. No. 27. Art. 3945
The basis for bankruptcy of citizens is the criterion of insolvency. Unless otherwise proven during the court proceedings in a bankruptcy case of a citizen, a debtor is recognized as such if his debt to creditors in the aggregate amounts to at least 500 thousand rubles and these requirements are not fulfilled by him within three months. These external signs of bankruptcy are the substantive grounds for applying to the court to declare a citizen bankrupt and initiating bankruptcy proceedings.
An analysis of the rules on the insolvency of a citizen allows us to notice that the rules governing the restoration of his solvency are conceptually verified. The rules establishing the bankruptcy of a citizen cannot be recognized as such. This is due to the fact that they do not ensure the achievement of the main goal of the insolvency institution - the elimination of the insolvent debtor from the sphere of consumer credit.
This conclusion follows from paragraph 1 of Art. 213.30 Federal Law No. 127-FZ, according to which a citizen, for 5 years from the date of declaring him bankrupt, has no right to assume obligations under credit agreements and (or) loan agreements without indicating the fact of his bankruptcy.
The legislator has not separately regulated the issue of the legal consequences of concluding a loan agreement without notifying the credit organization of the fact of bankruptcy107. Some issues of interpretation of the norms of Chapter X dated October 26, 2002 No. 127-FZ tried to clarify the Plenum of the Supreme Court of the Russian Federation in Resolution No. 45, which confirmed the liberal nature of the legal regulation of personal bankruptcy in Russia, which in particular is expressed in a rather large amount, which is threshold for bankruptcy, and that according to Russian law, unlike, for example, German law, the first bankruptcy procedure is the restructuring of debts, and not the sale of property. Some difficulties are also observed in its practical application. For example, paragraph 17 of the Resolution speaks of repaid debts in a “short period of time.” The content of such concepts as “deliberately unfulfilled plan” in paragraph 31, “stable high wages” in paragraph. 3 clause 30, “stable income” in para. 2 clause 34, “a fair balance between the property interests of creditors and the personal rights of debtors” in para. 1 paragraph 39, also not defined108.
Procedural specificity in cases of bankruptcy of a citizen is one of the pressing issues of legal regulation. Consider the numerous judicial practices, according to which the legislator, in the difficult search for a legal solution, recognized the priority of the jurisdiction of arbitration courts and the Arbitration Procedure Code of the Russian Federation.
Thus, the design of the institution of bankruptcy of citizens is in a state of dynamic development. The set of measures aimed at improving the legal regulation of bankruptcy insolvency should include changes to domestic bankruptcy legislation aimed at highlighting general provisions and rules on bankruptcy procedures.
105 Popondopulo V.F., Slepchenko E.V. Bankruptcy of citizens: substantive and procedural aspects // Laws of Russia: experience, analysis, practice. 2015. No. 9. S.3.
106 Volkova M.A., Stepanova N.A. Contractual regulation of representative legal relations // Current problems of Russian legislation. 2015. No. 9. P. 25-33.
107 Raudin V. Expanded interpretation //Ezh-Lawyer. 2015. No. 44.P.7.
Bibliography
1. Andreev S.E., Vitryansky V.V., Denisov S.A. etc. Scientific and practical commentary on the Federal Law “On Insolvency (Bankruptcy)” (article-by-article) / ed. V.V. Vitryansky. M.: Statute, 2003.
2. Volkova M.A., Stepanova N.A. Contractual regulation of representative legal relations // Current problems of Russian legislation. 2015. No. 9. P. 25-33.
3. Kuznetsov S.A. The main problems of the legal institution of insolvency (bankruptcy): monograph. M.: Infotropik Media, 2015.
4. Maltsev V.A. Legal mechanisms for protecting the rights of workers in the event of bankruptcy of employers in Germany and Russia // Labor and social relations. 2015. No. 3. P. 35-45.
5. Popondopulo V.F., Slepchenko E.V. Bankruptcy of citizens: substantive and procedural aspects // Laws of Russia: experience, analysis, practice. 2015. No. 9. C.3
6. Raudin V. Expanded interpretation // Ezh-Lawyer. 2015. No. 44. P.7
7. Semenova E.A. Legal regulation of transactions in the event of bankruptcy of a citizen // Laws of Russia: experience, analysis, practice. 2015. No. 9. P.30.
8. Sitdikova L.B. Theoretical and practical problems of legal regulation of information and consulting services in civil law of Russia - M.: IG "Lawyer", 2008 - 344 p.
9. Starodumova S.Yu. The concept of real estate in civil law // Legal world. 2015. No. 5. P. 42-45.
10. Construction and housing law: textbook / ed. N.M. Konovalova, V.K. Pisarenko, A.L. Shilovskaya - M.: Moscow State. acad. communal services and construction, 2010. pp. 56–58.
Property of individual entrepreneurs during bankruptcy proceedings
During the bankruptcy procedure, the property of an individual entrepreneur is the property of the debtor, but is subject to an inventory and cannot be transferred to the disposal of third parties. When a decision is made on the borrower's insolvency to pay debts under loan obligations, the bailiff service seizes real estate, vehicles, and any other property of the responsible person.
The list of objects and things excluded from collection includes the housing of an individual entrepreneur who has become bankrupt. One unit of real estate (house, apartment, other object) remains with the owner if this is the only place suitable for living. The land on which the house is located is also a non-confiscatable plot. Personal belongings of an individual (except for jewelry, valuable objects of art), as well as property intended for professional activities (except for expensive ones, costing from 100 minimum wages) are not confiscated. Food and money in an amount less than the subsistence level remain untouchable. The entire list is listed in Article 446 of the Code of Civil Procedure of the Russian Federation, paragraph 1.
The role of the arbitration manager
An insolvency administrator is an inspecting, controlling person necessary in a bankruptcy case, selected from a list of candidates by the applicant for declaring the debtor bankrupt. Thus, the arbitration lawyer represents the interests of the applicant party.
In cases where an individual entrepreneur independently files a petition for recognition of bankruptcy status, the role of the arbitration manager is to carefully study the financial situation of the applicant, finding ways to restore creditworthiness and financial recovery. Otherwise, the manager creates a bankruptcy strategy to minimize losses. The arbitration manager accepted by the creditor must maximize the credit institution's gain in the transaction.
Completion of bankruptcy proceedings
The bankruptcy procedure can be completed without a decision on the debtor's bankruptcy. In some cases, the case is postponed for a certain period of time, checking the ability of the individual entrepreneur to make payments on the loan, approved and restructured in court. Sometimes a manager can find a way to financially improve the activities of a business entity, then the bankruptcy case is terminated or postponed.
Completion of the bankruptcy procedure for an individual entrepreneur is the same for all cases of declaring a person bankrupt. The debtor's property is seized and sold at auction. Debts are distributed among creditors. Uncovered debts are subject to write-off and cannot be claimed after a court decision.
Bankruptcy procedure for individual entrepreneurs (individual entrepreneurs)
As a result of this process, the following bankruptcy procedures for an entrepreneur may be applied:
- observations;
- bankruptcy proceedings;
- settlement agreement.
Important!
Typically, in the case of individual entrepreneurs, the stages of bankruptcy of an individual entrepreneur such as external management and financial recovery are not used.
The arbitration court determines the period during which the individual entrepreneur is given the opportunity to pay his debts. If this does not happen, he will be declared bankrupt. At the surveillance stage, the entrepreneur’s property, which is subject to collection, is seized. After completion of this stage, bankruptcy proceedings begin.
Important!
During the trial, the individual entrepreneur cannot make any financial transactions or sell property.
The entrepreneur's property is seized and all debts are paid. Repayment of obligations is carried out in strict sequence: creditors of the 1st priority, in respect of whom the entrepreneur took actions that entailed a threat to life and health, satisfy the claims first. Next, debts on wages, severance pay and other remuneration are paid. Then all other requirements are met.
After all necessary settlements with creditors are completed, the individual entrepreneur is relieved of all other obligations that arose in the course of business activities.
