Insolvency is what?

What is the definition of the concept of insolvency? What are its main criteria and reasons? How is the process of recognizing insolvency and what are the disadvantages of this situation?

Views of different countries

Now more often you can hear this term not only in the media, but in everyday life. What does it mean? Insolvency is the lack of possibility for the debtor to pay its debts to creditors. It is noteworthy that different countries treat debtors differently. For example, in the US and France there is a special system that allows an insolvent person to get rid of debt obligations and create a new business. In other European countries, there is another system in which the debtor is obliged to meet the creditor requirements as much as possible.

In Russia, this process is approached ambiguously: somewhere debts are allowed to write off, but somewhere they are forced to pay. However, if insolvency, bankruptcy was declared fictitious, then this is already a serious crime and, accordingly, is punished by law.

Statement of bankruptcy

How does the bankruptcy process go? Who can claim this status? It should immediately be mentioned that both a legal entity and a physical entity can be declared bankrupt. However, in the current legislation, certain regulatory procedures are poorly developed and, therefore, insolvency and bankruptcy of individuals are practically not being discussed. In other words, the possibility of declaring individuals about such a state does not really work.

In Russia, only an arbitration court can recognize bankruptcy. Therefore, the primary action is to file an application for bankruptcy. This statement can be submitted by the debtor himself and creditors. Such a status must be proved: a bankrupt should have certain signs of such a situation. The result in this process is either liquidation of the enterprise, or full recovery of financial obligations to the creditor.

Signs of insolvency

What signs can determine the insolvency of the debtor? First, this is the presence of debt owed to creditors; Second, the inability to pay mandatory payments or arrears; Thirdly, the existence of debt obligations of more than 10 thousand rubles for an individual and more than 100 thousand rubles for a legal entity; Finally, the debtor is declared bankrupt by the appropriate court.

In fact, the bankruptcy procedure is one of the most complicated, and for its implementation, specialist assistance is needed. It requires a careful approach and a large amount of time, since it is the court that establishes supervision over the activities of the enterprise in order to exclude the option of fictitious or deliberate bankruptcy. However, surveillance is not the only method of setting the insolvency status; There are still many different options for verifying this information.

The procedure for restoring financial solvency

Financial inconsistency is not simply recognized as a fact, it can also be attempted to be restored with the help of certain measures. The monitoring procedure involves the appointment of a temporary administrator, through which all transactions related to the debtor's property take place. This is required in order to preserve the property before the issuance of the verdict of the arbitral tribunal, as well as to identify the real state of the debtor's financial position.

Financial recovery is carried out with the help of an administrative manager. The main task of this procedure is the rehabilitation of the bankruptcy solvency. If in both these cases the management of the enterprise is not suspended, then the procedure for external management implies a similar suspension. For the duration of this procedure, all penalties and other accruals of creditors are canceled, but the manager is required to create a plan for the restoration of financial and material well-being and provide it to the creditors.

The new manager

The concept of insolvency includes a lot of different procedures. And how is the manager appointed in the procedures of supervision and financial recovery? In such a responsible position, a citizen is selected who is a member of one of the organizations of arbitration managers. Assign management is possible only to the person who does not have any direct benefits from the bankrupt. In parallel with the financial recovery of the debtor, the new manager can engage in other activities, but only if they do not interfere with the bankruptcy case and completely exclude any conflicts of interest.

Obligatory conditions are: higher vocational education, experience in management positions for at least one year, passing a specially formulated exam. The arbitration manager also should not have a criminal record.

Competition method

The importance of insolvency carries a lot of problems, therefore, along with financial recovery and other cardinal methods, the method of competition is also used.

The purpose of the competition is to resolve problems related to the debt obligations of the debtor, or more specifically - the presentation of its property for sale. After the sale of the property, the time comes to pay the debt to the creditors in the order of the queue. Such a competition can be carried out both compulsorily and voluntarily. Not necessarily the property of the bankrupt is sold, it is also distributed by creditors, but only exclusively with observance of the competitive procedure. Such a method can be applied to both legal entities and individuals. Insolvency is a status that can be assigned to different categories of citizens and enterprises.

Mutual agreement

There is also another method of fighting bankruptcy, called the "settlement agreement". This is a contract that is concluded between the debtor and creditors. It is used to resolve all issues related to debt restructuring. Insolvency is a provision that must necessarily be proved in court. And only after this procedure the debtor has the right to claim an agreement.

This agreement is also considered in court, and only an arbitration court can satisfy it. An obligatory aspect in concluding a settlement agreement is the consent to this procedure of both parties. After the conclusion of such an agreement, the process of restructuring the loan structure begins (installment payments, revision of interest, deferred payments).

Absolute and relative insolvency

This direction in the legal practice is definitely new, because the status of bankruptcy appeared recently. The very term of insolvency rests on the term "insolvency". The latter, in turn, is divided into relative and absolute.

Absolute insolvency is called bankruptcy, while relative insolvency implies overcoming insolvency with the help of agreements between the debtor and creditors, payment by installments.

The legal definition of insolvency is described in the Federal Law "On Bankruptcy"; It is the debtor's inability to compensate in full the losses for monetary obligations to creditors or to fulfill the requirements for payment of mandatory payments, which is recognized by the arbitration court. However, do not forget that bankruptcy and insolvency are used as synonyms.

Individuals

More and more often, various organizations became bankrupt. And there are really many reasons for this. But insolvency is a term that applies to individuals. In order for a citizen to be declared bankrupt, several factors must be taken into account: his debts must be above half a million rubles; No payment for payments should be more than 3 months. When these criteria are present and the citizen is declared bankrupt, then certain restrictions and prohibitions are imposed.

For several years, this citizen will not be able to carry out entrepreneurial activities, will not have the right to consolidate in managerial positions, will not take loans from any bank. Until the bankruptcy proceedings stop, the citizen will not be able to travel abroad. And this is not the whole list of restrictions.

Regulatory and legal aspects of insolvency

Legal insolvency is well developed for all categories that fall under the bankruptcy clause. More precisely, the legal regulation carries a lot of complex measures to exit from the status of bankruptcy, as well as to close all debts of the debtor. Of course, as a result of these measures, all property of the enterprise can be sold, but no one will take more than it is supposed to. Since the commencement of bankruptcy of an enterprise, an individual entrepreneur, or an individual, any accrual of interest, penalties or delinquency has stopped.

Insolvency is a situation under which various categories of persons fall. Are there any categories that can not fall under the concept of bankruptcy? Yes, there are. These include state-owned enterprises, religious organizations, and political parties.

Fictitious Bankruptcy

Often, starting their own business, entrepreneurs can not accurately calculate the entire plan of their business, thereby increasing the chances of bankruptcy. However, insolvency is not only a real danger, but also a certain way of deceit, to which unscrupulous entrepreneurs go. This step is being taken for many reasons. For example, in order not to pay monetary obligations to both creditors, and to individuals or even government bodies. Nevertheless, to prove fictitious bankruptcy is quite realistic, and the punishment for this deception is quite serious. The deceived will receive either a fine in the amount of 80,000 to 300,000 rubles, or a ban on conducting this business for a period of 12 to 36 months, or a real prison sentence of up to 72 months. Therefore, it is worth considering the need for such a deception and understand that it will necessarily have to be responsible for it.

How to avoid bankruptcy

Do not think that failure is an inevitable process. It's a delusion. Bankruptcies can be avoided if you follow certain measures: to have certain stocks of cash for the organization, to increase revenues from transactions or sales (sales should be increased not through price reduction, but through advertising campaigns, increase in the number of buyers, etc.). Try to convince your customers of the need to pay advance on transactions, control the process of delayed payments and unpaid bills, monitor the timely registration of accounts, try to optimize the system of sales of goods and services, reduce staff, if in any of them do not need at all. Naturally, you do not need to fire all the employees or through one, otherwise there will be no one to help in the development of the business, but the only talk about the possible reduction of employees will make the team work more efficiently.

Bankruptcy as a continuation of the path

Despite the fact that the mention of bankruptcy in many causes unpleasant thoughts, this is far from the end. Insolvency, bankruptcy is a definition that can give a second chance to a firm or organization. Sometimes the enterprise does not collapse, dozens or even hundreds of people are not dismissed, but the head changes. Yes, it is possible to lose investments, cash, property, but at the same time a second chance is acquired. Many were able to rise from scratch once, they would not give up for the second time. It's one thing when an enterprise or organization becomes bankrupt. And how does the bankrupt person, who is an individual, feel? On insolvency, bankruptcy in this case is doubly frightening. Only the law here is on the citizen's side and is aimed precisely at ensuring that his property remains intact and safe, and the person does not remain torn. Of course, no one will become richer from bankruptcy, but to consider this the end of the road is absolutely not worth it.