Out-of-court bankruptcy: what is it?
The fact that now it will be possible to go through the bankruptcy procedure completely free of charge. The application is made through the MFC, the form is standard, provided for by order of the Ministry of Economic Development of the Russian Federation of 08/04/2020 No. 497 and the MFC employees will help to fill it out, therefore, all kinds of help from intermediaries in this matter is excluded. The procedure is quite simple and does not require special legal knowledge. Another plus is, of course, the timing. Only six months and no extension. It is clear that in new procedures everything does not always work smoothly, the gears of the mechanism must be well rubbed in and be lubricated. Neither the employees of the MFC, nor the bailiffs yet have experience in working under the new rules, and, quite possibly, disputes will arise. For experts in the field of bankruptcy, amendments to the law also raise a lot of questions.
Application for bankruptcy at the MFC
An application for out-of-court bankruptcy at the MFC can be submitted by those debtors whose debt amount is from 50,000 to 500,000 rubles. not counting penalties, forfeits, interest for late payment, other penalties, losses; the enforcement proceedings have been completed due to the lack of property and no other enforcement proceedings have been started. Note that all of these conditions must be met at the same time. Those who have a debt of more than 500,000 rubles. must go bankrupt through the courts, the simplified procedure will not suit them.
The out-of-court bankruptcy procedure is carried out only at the request of the debtor. Neither the bankruptcy creditor nor the authorized body can apply to the MFC. The applicant can be an individual or a sole trader. You need to contact the MFC at the place of residence. Attached to the application for out-of-court bankruptcy: a list of creditors in accordance with the form approved by the order of the Ministry of Economic Development of August 05, 2015 No. 530, a copy of the passport.
How is the procedure?
The MFC, having received a citizen’s application, within one day must check the data on the return of the writ of execution to the recoverer due to the debtor’s lack of property, as well as information on the absence of initiated enforcement proceedings. If the debtor’s application complies with the requirements of the law, the MFC, within three days, places information about the beginning of the bankruptcy procedure in the Unified Federal Register of Bankruptcy Information (EFRSB). If not all the conditions are met by the debtor, within three days the MFC returns the application to the debtor with a written indication of the reasons. The refusal can be appealed to the arbitration court. A citizen may re-apply after one month. If the debtor once successfully went bankrupt under the simplified procedure, it will be possible to apply again only after 10 years, so going bankrupt is cheap and often will not work.
As soon as information about bankruptcy is included in the federal register, a moratorium on satisfaction of creditors’ claims begins to operate. If at this time the bailiffs receive writ of execution on the requirements specified in the bankruptcy petition, enforcement proceedings on such sheets are not initiated. The moratorium also prevents the sending of enforcement documents to banks. Execution of property recovery from a citizen is suspended. Arrests are removed from property imposed in order to secure the claims included in the application for declaring the debtor bankrupt. New seizures of property are possible only for claims not specified by the debtor in the application, as well as for claims that are not subject to the moratorium. Within six months, the creditors indicated in the application have the right to request information from the regional authorities about the property of a citizen.
What is not subject to the moratorium?
Those requirements that the debtor did not indicate in the application. Therefore, it is in the interests of the debtor to recall all debts when applying. The moratorium does not cover claims for compensation for harm caused to life and health, the recovery of property from someone else’s possession, for the payment of wages, for compensation for moral damage, for the recovery of alimony and other claims closely related to the personality of the debtor. From the moment information on bankruptcy is included in the register, the accrual of penalties and interest ceases, the deadline for fulfilling the obligations included in the application is considered to have come, and the ability to send writ of execution for collection to the bank is suspended – only to bailiffs.
The MFC notifies the banks with which the debtor has bank account agreements, the district court, the bailiff service at the debtor’s place of registration, the authorized body, and the body that registered the citizen as an individual entrepreneur about extrajudicial bankruptcy. While the debtor is undergoing bankruptcy proceedings, he cannot receive new loans, as well as act as a guarantor.
How does out-of-court bankruptcy end?
If within six months the position of the debtor changes for the better: he receives an inheritance, property as a gift, or simply earns money to pay off the debt, the debtor notifies the MFC within five days.