Jul 31, 2020
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Russian President signed a law on extrajudicial bankruptcy

On July 31, Russian President Vladimir Putin signed a law establishing the procedure for out-of-court declaring an individual bankrupt.

The document was published on the portal of legal information. The law stipulates that for citizens the support of such a bankruptcy order will be free. It will affect those persons whose debt ranges from 50 to 500 thousand rubles. The developers of the legislative initiative justify its necessity by the fact that the current procedure for declaring bankruptcy through the court is ineffective.

As noted in the accompanying note, according to the Unified Federal Register of Bankruptcy, 70-80% of debtors do not have property that can be repaid during the inventory. The new law completely excludes arbitration managers from the process. The whole procedure will be carried out through the MFC.

Debtors who have already completed enforcement proceedings will be able to initiate the bankruptcy process, while the lack of property that could be sold to pay off the debt will not interfere with the procedure. A person who has completed enforcement proceedings will be able to submit an application through the MFC. After checking the correctness of the document, the applicant becomes bankrupt after six months. From the moment the application is accepted, he is exempted from fines.

As wrote, in Russia for the first half of 2020 the number of company bankruptcies decreased to 4.5 thousand (by 26% compared to the same period in 2019). However, the number of individuals and individual entrepreneurs declared bankrupt increased to 42.72 thousand people - 47.2% more than in the first half of 2019.

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