Signs of bankruptcy of an individual. When can you file for bankruptcy and when is it necessary to do so?

The concept of an insolvent debtor

The consequence of the definition of the concept of insolvency is the concept of an insolvent debtor, implying an entrepreneur who is unable to fulfill his obligations to pay a mandatory payment and failure to fulfill it within the contractual period. It follows that insolvent debtors may include individual entrepreneurs, as well as commercial and non-profit organizations engaged in entrepreneurial activities. This list does not correspond to the circle of persons defined by current law and legal science as insolvent debtors.

The legislation defines insolvent debtors as persons who are insolvent debtors, which is regulated by the provisions of Art. 25, 65 of the Civil Code of the Russian Federation and clauses 2, 3 of Art. 1 of the Bankruptcy Law. As a result of the analysis of regulatory decisions, it follows that insolvent debtors may include individuals, commercial and non-profit organizations, regardless of business activity. These do not include state-owned commercial organizations, political parties, religious organizations, state corporations, companies and foundations.

“Insufficiency of Assets”: What does it mean when the term is used?

This definition means the excess of the volume of liabilities over the value of assets available for sale. Simply put, this is a situation where there is a debt, but there are no real assets to pay it off, even if everything is sold.

It is actively used in two areas:

• In case of bankruptcy - if the liquidation commission records this case, further closure of the legal entity (obtaining insolvency status) occurs exclusively in accordance with the judicial procedure provided for by the Law “On Insolvency”.
• In case of trust management - if it turns out that cash and other funds are not enough to cover the debt, then, according to paragraph 3 of Article 1022 of the Civil Code of the Russian Federation, the recovery will be directed to the assets of the responsible manager, and if they are not enough to pay, then also to the property of the founders .

In what situations is the sale of a citizen’s property carried out?

The bankruptcy estate must be sold if:

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• the borrower did not submit a restructuring plan on time;
• creditors did not agree with changes to the payment schedule;
• the court considered and rejected the defendant’s proposal;
• the debtor showed his bad faith by violating an already signed settlement agreement, by delaying the next repayment, or in some other way.

All these cases are regulated by Article 213.24 of the federal law “On Insolvency”.

Usually it is the potential bankrupt who takes the initiative to introduce such a procedure. The reason is time: when health measures are approved and implemented, the closure process will inevitably stretch over several years, during which it will be necessary to pay, albeit partially, monthly under the contract.

The auction goes much faster, and all the money received from it is distributed among the lenders, and the outstanding balance is simply written off, which is also profitable. Another plus is that after the official announcement of liquidation, the second party no longer has the right to demand a refund or make any other claims. This is convenient for those defaulters who do not have expensive property available. By the way, the difficult financial situation becomes a compelling reason for them to skip the restructuring.

When is a citizen required to file a bankruptcy claim?

This is stated in paragraph 1 of Art. 213.4 of the Law “On Bankruptcy”. You must file a claim with the arbitration court within 30 calendar days if:

• the total amount of the debt is more than 500 thousand rubles, and it does not matter whether the payment deadline has come or not yet;
• the citizen does not have enough funds to pay off all creditors. That is, if the debtor pays off one or more creditors, then there will not be enough funds for the remaining creditors.

When the two conditions above are met simultaneously, the citizen is obliged to file a bankruptcy claim with the arbitration court within 30 days.

The question arises: what will happen if a citizen does not fulfill this obligation? For failure to submit an application, when a citizen is obliged to submit it, a fine is provided - from 1 thousand to 3 thousand rubles (Clause 5 of Article 14.13 of the Code of Administrative Offenses of the Russian Federation). But the problem is not the fine, but the fact that failure to submit an application postpones the resolution of the debt issue until later. Until the court accepts the bankruptcy petition, interest will continue to accrue, and the bank collection service and debt collectors will continue to call.

What assets can be sold?

According to Article 213.25, these are all values ​​identified by the financial manager during the inventory.

But even if the debtor’s property is insufficient, the following are not subject to collection and sale:

• personal items,
• Food,
• tools needed for work,
• equipment needed for the production process,
• the only housing.

Please note that an apartment purchased with a mortgage or pledged is not included in this list. A complete list of objects remaining with the borrower even after the formation of the bankruptcy estate is given in Article 446 of the Civil Code of the Russian Federation.

It should be taken into account that the CM can even include values ​​that are in shared ownership, even those acquired during marriage, as stated in the Family Code of the Russian Federation. Moreover, in such situations, only the difference that remains after successive satisfaction of the creditors’ claims can be transferred to the co-owners or wife/husband.

Reflection of the issue in literature and law

Legal literature constantly debates the circle of persons considered insolvent, in particular the possibility of insolvency of non-profit organizations. The majority of scientists admit the possibility of insolvency of non-profit organizations, regardless of the presence of entrepreneurial activity. Unlike other scientists who consider this fact to be unfounded. The correct solution to this issue requires research into the purpose and main objective of bankruptcy law.

There is no consensus on this issue in science, although legal literature pays great attention to this problem. To consider the purposes of the institution of insolvency, it is necessary to turn to the course of history. As already noted, bankruptcy law arises with the development of trade based on the presence of an advance source of payments, but this does not mean that it was trade that caused the emergence of bankruptcy law. It was the reason for the emergence of the main category of bankruptcy law, namely insolvency, which reflected the dynamics of advanced capital as a source of payment.

Trading activity is inextricably linked with the availability of public credit. Therefore, bankruptcy law arose as a consequence of the requirement to protect public credit applied in the course of trading activities. The capitalist mode of production has extended the scope of credit also to non-trade activities - production. This created a need for credit protection in this area, that is, the institution of insolvency extended to the production, non-trade part of the activity. The emergence of the institution of insolvency arose as a result of the need to protect public credit through bankruptcy law, which could ensure timely payments by eliminating the insolvent debtor from the field of credit relations.

This goal of competition law was not evident in the legislation of all states. The differences in the bankruptcy law of states with a high level of trade are different from those of states with underdeveloped trade. In the latter, bankruptcy law arose as a result of the transformation of executive production standards. The purpose of such proceedings was to satisfy the claims of collectors using the debtor's property. Germany and Russia aimed at bankruptcy law to satisfy the claims of creditors. In England and France, bankruptcy law represented a new type of legal institution based on the category of insolvency and the elimination of insolvent debtors from credit relations, as well as their liquidation as subjects of credit relations with a ban on activities based on credit.

It was the difference in the goals of bankruptcy law that affected its features. For example, if the purpose of insolvency is to satisfy the claims of creditors, then bankruptcy proceedings with one creditor are impossible. An essential condition for insolvency is the convergence of creditors. German lawyers also consider it contradictory to open a competition if there is only one creditor. On the contrary, in countries where the purpose of insolvency is to remove insolvent debtors from credit relations, bankruptcy proceedings with one creditor are considered possible, and the confluence of loans is not the main condition for opening bankruptcy law. Insolvency could be declared even in the event of non-payment to one creditor, that is, the position of the debtor himself was taken into account.

Consequences of differences in the purposes of legislation

The difference in legislative purposes does not mean that credit cannot be protected. Insolvency legislation for the purpose of satisfying loans is less effective than legislation for the purpose of eliminating the debtor from the lending industry. This inefficiency is as follows:

1. The result of bankruptcy law in any case is the liquidation of the debtor as a lending subject, but bankruptcy law with non-payment and satisfaction of creditors’ claims liquidates the debtor from the moment of his non-payment, which makes it possible to increase the size of non-repayable loans. The principle of eliminating insolvent debtors from the sphere of credit relations, as a goal, allows them to be liquidated even before the moment of non-payment, which does not make it possible to increase the debt. In modern bankruptcy law, this shortcoming has been eliminated, since the insolvency criterion is used here.

1. The ineffectiveness of this bankruptcy law is manifested in the prohibition of applying the rules of bankruptcy law in the presence of one creditor of an insolvent debtor. The use of general enforcement proceedings is considered a sufficient measure, that is, the creditor’s claims are satisfied. There is no liquidation of the insolvent debtor as a subject of public credit. In such cases, it is more expedient to apply the rules of bankruptcy law - the creditor’s demands are satisfied and the insolvent lending entity is removed. At the same time, competition law confirms the idea of ​​satisfying creditors’ claims as the main task of competition law.

The rules of bankruptcy proceedings thus prevent the state of non-payment of an insolvent debtor. Various methods of resolving creditors' rights are considered. The modern provision of insolvency presupposes the presence not only of bankruptcy proceedings as a historical bankruptcy procedure, but also of restoration procedures, since the purpose of the system is to operate and integrate tasks regarding the bankruptcy procedure. The goals of bankruptcy law and restoration procedures are different in execution due to the differences in their main tasks.

The type of insolvency of the debtor must be taken into account. If the debtor is a legal entity, liquidation is carried out by eliminating the legal entity. If this is an entrepreneur, then insolvency is eliminated by deprivation of business status and temporary deprivation of the opportunity to operate on the basis of lending. This is confirmed by paragraphs 1 and 2 of Art. 216 of the Bankruptcy Law. Restorative procedures for eliminating an insolvent debtor include the implementation of methods for restoring the solvency of the subject, which speaks in favor of eliminating the insolvent debtor from credit relations as the goal of bankruptcy law.

When studying the topic of the goals of bankruptcy law, it is necessary to establish the circle of persons who are likely to be insolvent, that is, insolvent debtors. The current legislation does not imply the insolvency of state-owned enterprises in accordance with Art. 65 Civil Code of the Russian Federation. This is not entirely logical, because an enterprise as a commercial organization is a subject of activity based on advanced capital. Consequently, it is capable of undergoing a state of insolvency, that is, withdrawal of advanced capital from circulation. This invariably leads to the impossibility of payments. If it is impossible to apply bankruptcy law, non-recoverable debt increases, as does damage to public credit, even despite the imposition of subsidiary liability in paragraph. 3 paragraph 6 art. 113 Civil Code of the Russian Federation. This measure does not fully ensure the accuracy of the company's payments to creditors. In view of such circumstances, expanding the circle of insolvent debtors in the form of state-owned enterprises will improve bankruptcy legislation.

Declaring non-profit organizations insolvent is a more complex issue due to the fact that their activities do not depend on advanced capital and the use of loans. But according to paragraph 5 of Art. 50 of the Civil Code of the Russian Federation, they are able to carry out profitable activities, which may imply the formation of advanced capital and the need for lending, with the subsequent application of all rules of bankruptcy law to such relations. There are two possibilities for settlement - applying the rules of bankruptcy law when conducting income-generating activities or implementing this procedure regardless of debt obligations. The second option seems more rational, since in the first case uniformity regarding the definition of debt cannot be ensured. It is logical that non-profit organizations can also be included in the circle of insolvent debtors.

Property immunity

This term refers to those assets that are removed from the debtor’s property by court decision, since they are not subject to sale in accordance with the Federal Law “On Insolvency”.

Typically, the main concern of individuals is their only home. In practice, this definition includes not only an apartment or a house, but also a dacha, a country cottage, a share in property, or even a plot of land, if it is suitable for habitation and there is no other real estate available. There is protection from sale even if a person is registered at a different address or is actually permanently located in a different region.

Read Bankruptcy through bailiffs: can they be declared bankrupt through a bailiff?

Almost the entire permanent income of the future debtor automatically goes to pay off obligations - only the subsistence level is deducted from it, both for the person himself and for his dependent parents and/or minor children. Immunity is also gained by:

• personal awards of value to collectors,
• Pets,
• Houseware.

In addition, an individual can remove from KM objects the total cost of which is 10,000 rubles or less, if he needs them to carry out work or provide for vital needs. The main thing is to correctly explain your desire, and lawyers will help you convincingly present your arguments in documentary form.

How does a financial manager perform a property valuation?

A court-appointed specialist determines what can be included in the bankruptcy estate based on an inventory of assets compiled by him (based on the results of an audit). He looks for objects that have immunity, and transfers everything else to an auction that lasts about six months.

In the standard case, the following values ​​are subject to sale:

• included by the debtor in the liquidation application;
• hidden, but found by the responsible expert;
• purchased with collateral;
• donated or sold within 3 years, if the administrator has grounds to challenge the transaction.

A specialist must visit the property for inspection - the day and time of the visit can be agreed upon. He is also obliged to request from government agencies the history of purchases and sales of his ward over the past 3 years - to identify dubious cases and alienate items in favor of paying off obligations.

Signs of insufficient property under the Bankruptcy Law

The main and direct one is that the value of all assets assessed by the financial manager is less than the volume of obligations to be repaid.

In addition, it is possible to understand that an individual is unable to pay off debts by the following indirect indicators:

• deductions to creditors stopped, although previously they were made regularly;
• the borrower does not comply with the payment schedule for a month or longer, and during this time he has not paid more than 10% of the total amount;
• a decree was issued to terminate enforcement proceedings due to the lack of objects for collection.

The solvency of a business entity is determined by ratios - current liquidity and working capital availability - and by the duration of non-fulfillment of contractual obligations. If he ignores his part of the agreement for 1-4 quarters, the other party can confidently initiate the process of liquidation.

How are assets sold?

One of the parties or the responsible inspector applies to the court with an application to launch the procedure and documents confirming the existence of the problem. Arbitration specialists review certificates, contracts, receipts and issue a verdict. If they grant the application, a number of stages begin.

Formation of the bankruptcy estate

An appointed specialist checks the valuables available for sale and draws up an inventory of them. At the same time, the financial manager makes sure that the debtor meets the criteria of insolvency and, most importantly, that he has not hidden part of his property. He:

• collects information through requests to Rosreestr, tax authorities, banks, patent bureaus and even traffic police,
• analyzes income, expenses, transactions over a period of 3 years.

If he finds out that during this period an apartment, car, boat or other valuable piece of property was donated or sold significantly below market value, he initiates a challenge and alienation. From those assets that are available for sale and are not subject to immunity, he creates the CM.

Exclusion of objects from the bankruptcy estate

It removes from it what cannot be an auction lot in accordance with Article 446 of the Civil Code of the Russian Federation, as well as things necessary for work and/or life worth 10 thousand rubles or even more (under exceptional circumstances). But the borrower must confirm his desire to leave the latter by submitting an application to the financial manager, which he will forward to the arbitration body.

Property valuation

A responsible specialist appointed by the court determines how much a particular piece of property will cost and records the results in the inventory. If one of the parties does not agree with the inspector’s conclusions, it has the right to involve an independent expert in the process, but then it will have to pay for his services.

It is important to understand that a borrower can deliberately inflate the value of an asset in order to reduce its liquidity and increase the likelihood that no one will simply buy it and it will return to the previous owner in accordance with Article 148 of Federal Law No. 147. Or, conversely, deliberately lower the price if his relatives are going to buy things under a hammer.

Read Bidding in bankruptcy: what is it, stages of an open auction

Auction organization

Today they can also be carried out through specialized electronic platforms, which is very convenient. Having identified the characteristic signs of insolvency and insufficiency of the debtor’s property, formed the bankruptcy estate and determined the cost of its components, the financial manager launches bidding, which can be divided into 3 stages:

• primary – participants make their offers on the presented lots, and the one who bids the highest amount wins;
• repeated – items of property that were not sold at the previous stage are offered again, but at 10% cheaper;
• public - assets that have not been chosen by anyone are sold at a floating discount, reaching even 99%.

At the end of the auction, the responsible persons draw up a protocol within half an hour, in which they transparently describe the nature of the event, then within 3 days they formulate and publish the final results - with the winners, and a purchase and sale agreement will subsequently be signed with each of them.

If the value is not acquired at any stage, it is offered to the lenders, and if they refuse it, it is returned to the owner.

Satisfaction of creditors' claims

According to Article 213.27 of Federal Law No. 127, it is carried out in a certain order:

• legal costs, remuneration to the financial manager, alimony;
• staff salaries;
• payment for housing and communal services and other services;
• compensation for damage caused to the life or health of third parties;
• settlements with the tax office;
• repayment of loans from banks and microfinance organizations, as well as those held by collectors.

If the collateral is sold, 80% of the proceeds go to the mortgagee, and 20% to those making legal claims. If there is not enough money to cover all obligations, partially outstanding ones are considered written off. In case of subsidiary liability, it is possible to recover funds from other owners.

Completing the implementation process

The financial manager draws up and submits a report in which he details what measures he has taken and attaches documents confirming the legality of his actions. Based on this report, the balance is calculated, which is subsequently successfully written off by the arbitration body at the final meeting.

The procedure for closing a company if there is insufficient property to satisfy creditors' claims

In accordance with Article 224 of Federal Law No. 127, the liquidator must send to the court a statement about the financial insolvency of the defendant. He is obliged to do this within 10 days from the moment the impossibility of paying off the obligations was revealed. The petition is allowed to be sent regardless of the results of the interim balance.

If the founder or manager of a problem company has decided to terminate business activities, but a commission has not been appointed, he should independently contact the arbitration body to initiate the procedure.

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Insolvency of citizens

The issue of recognizing citizens who are not entrepreneurs as insolvent debtors requires separate consideration. Their peculiarity is that the main activity of the subject does not depend on public loans. According to the general rules, this fact excludes the use of bankruptcy law on the basis of a loan in this case. Misunderstanding of bankruptcy bankruptcy provisions for individuals leads to incorrect bankruptcy provisions. According to the Bankruptcy Law, a citizen declared bankrupt does not have the right to enter into credit/loan agreements without notification of this. If he is declared bankrupt again for the specified period, according to statements of creditors in an initiated bankruptcy case, exemptions from loan obligations are not applied, despite the presence of a positive aspect of bankruptcy law.

It turns out that the law accepts the insolvency of citizens as an institution for exemption from debt obligations, which does not correspond to the theory of bankruptcy law as a whole. This not only does not protect the public credit, but harms it. However, the above does not mean that the institution of bankruptcy cannot be applied to citizens. This is possible if they are a consumer of a loan protected from insolvency by the institution of bankruptcy. At the moment, such non-entrepreneurial loans are divided into 3 types:

• public credit based on monetary obligations between individuals;
• communal public lending;
• banking type of public credit.

The application of the institution of bankruptcy due to circumstances is possible for consumers of a bank loan. The purpose of the institution of insolvency is to eliminate insolvent citizens from the sphere of bank credit. As a consequence of this elimination there is a repayment of creditors' claims. However, the activities of citizens are not based on advanced capital, so they may be insolvent debtors rather than insolvent persons.

Issues of liquidated debtors, that is, legal entities on the verge of liquidation, are not subject to the application of the institution of bankruptcy law due to its meaninglessness, but only its non-payment is established, which is qualified from the point of view of law as a clash of creditors requiring resolution. This can be done in the following ways:

• through the application of competition law rules;
• satisfaction of the creditor's claims out of court;
• combined approach.

In the first case, an appeal is made to the arbitration court for bankruptcy of a legal entity with all the consequences. Improving bankruptcy legislation when resolving issues of liquidated debtors is more appropriate using a combined approach. The same applies to absent debtors. But in the absence of a conflict of rights of creditors, liquidation can be carried out administratively. We can conclude that the category of insolvent debtor does not coincide with the very concept of insolvency. In addition to entrepreneurs, the concept of an insolvent debtor includes unpaid, liquidated and absent debtors.

Measures in case of untimely provision of information about the insufficiency of property

The Law “On Bankruptcy” and the Code of Administrative Offenses state that a responsible person who submits data on insolvency in violation of the deadlines may be held administratively liable.

Such a strict and formal approach implies that the head of the company must go to court as soon as he stops repaying the loans taken. But what about those who have only temporary difficulties in business? Moreover, if, despite the delay in loans, he entered into contracts that promise to bring significant benefits. Should he really give up everything and shut down? Or what should a financial manager do, should he really pay increased attention to the first indirect signs of insolvency and signs of insufficient property, despite the fact that the rehabilitation procedures were carried out relatively recently?

No, and many courts have taken a broad interpretation on this issue. According to their position, liability occurs only in cases where, based on an analysis of data on the borrower’s condition, it is obvious that further waiting will only lead to the accumulation of an even greater volume of liabilities. And it may not exist if:

• the circumstances did not indicate an objective need for liquidation;
• the defendant and/or manager adhered to the approved and economically sound plan while it was current.

Under what conditions does a citizen have the right to file a claim for bankruptcy?

It is more difficult with a right than with a responsibility. In paragraph 1 of Art. 213.4 of the Law “On Bankruptcy” (about liability) indicates the exact amount of the debt - 500 thousand rubles. In paragraph 2 of Art. 213.4 (about the right) the amount of debt is not indicated, and generally vague wording is used.

So, a citizen has the right to file a bankruptcy claim if:

• the citizen foresees the onset of his bankruptcy due to circumstances that clearly indicate that he will not be able to pay his debts on time;
• the citizen meets the criteria of insolvency or insufficient property (we discussed this in more detail below).

When the law talks about the right to file for bankruptcy, it does not specify any “threshold” amount of debt. This means that you can file a claim when the debts have not yet exceeded 500 thousand rubles. But, of course, this does not mean that you can file a claim for any amount of debt, for example, 10 thousand rubles. The amount should be more impressive. The arbitration court to which the bankruptcy claim is sent will determine whether to accept the claim or not. If the court decides that the amount of debt is too small for bankruptcy, it will refuse to accept the claim.

What may be the circumstances that “obviously indicate that the debtor is unable to fulfill monetary obligations”? For example, dismissal from work and, as a result, cessation of earnings. Or the closure of the company and, again, the cessation of earnings.

But that's not all. In order for a citizen to have the right to file a bankruptcy claim, he must meet the criteria of insufficient property. What are these signs?