What is terrible about bankruptcy?

The procedure for bankruptcy in Ukraine is regulated by the Law of Ukraine No. 2343-XII of 14.05.1992 "On restoring the debtor's solvency or declaring it bankrupt."

According to the aforementioned Law, bankruptcy is an inability of the debtor recognized by the economic court to restore its solvency by means of the procedures for the readjustment and settlement agreement and to pay off the monetary claims of the creditors established in accordance with the procedure specified in this Law only through the application of the liquidation procedure.

The debtor, in respect of whom the bankruptcy procedure may be applied, can be both a legal entity - an entrepreneurial entity and an individual - for obligations that arose from an individual in connection with the performance of entrepreneurial activity, unable to fulfill his monetary obligations within 3 months after the onset of the established term for their execution, which are confirmed by a court decision, which entered into legal force and a resolution on the opening of an enforcement.

According to the law, such bankruptcy procedures as disposition of the debtor's property, settlement of the agreement, sanation of the debtor and liquidation of the bankrupt are applied to debtors.

The debtor, with respect to whom bankruptcy procedures were applied, is considered to be a person who does not have unsettled monetary obligations.

Bankruptcy of legal entities has certain peculiarities depending on the type of legal entity. In particular, there are provisions for bankruptcy for legal entities that have social or other value, a special status for agricultural enterprises, farms, insurers, professional participants in the securities market, the issuer or manager of mortgage certificates, the fund manager for construction or the fund of operations with real estate and some others.

As for the bankruptcy of individuals, the basis for recognizing an individual as a bankrupt is his inability to satisfy the creditors' claims for monetary obligations and / or fulfill the obligation to pay mandatory payments.

A petition for instituting bankruptcy proceedings against an individual may be filed with the economic court either by the debtor himself or by his creditors.

Also, it should be noted that on 19.10.2016, the Law of Ukraine "On Financial Restructuring" came into force, which contains new opportunities for debtors for their financial recovery through financial restructuring. Using the mechanisms and procedures for financial restructuring will help to avoid bankruptcy and ensure debtors' access to financing for the restoration of their economic activities.