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How to collect money from a debtor who has no money?

Let's imagine a situation: Your enterprise constantly conducts activity with other enterprise. Recently, your counterparty begins to delay payment. When a significant debt has accumulated, you will know that bankruptcy proceedings have been initiated against them. Moreover, the company does not have the money and property to repay its debts. Can I expect a refund?

The legislator provided for the possibility of collecting funds from the responsible persons for the debts of the enterprise. For ease of reading the text of the members of the executive body, founders and head of the company are called "responsible persons". 

What procedure?

Bankruptcy proceedings begin with the filing of an application by a creditor or debtor to open bankruptcy proceedings. After the court declares the debtor bankrupt, liquidation proceedings begin. The person responsible for disposing of the debtor's property - the liquidator - takes the necessary action to satisfy creditors' claims (repayment of your debt is also part of his authority). 

If the liquidator sold the company's property and settled with the debtors, but all the debts have not yet been repaid - he is authorized to apply to the commercial court for the application of subsidiary liability. 

Subsidiary liability - this is when the responsible person  pays such a sum of money that is sufficient for full repayment of debts. For example, the debtor owes you 100 conventional units. After the liquidation procedure, you were returned 80 conventional units. The person who will be brought to subsidiary liability will be obliged to return to you another 20 conditional units to repay the debt.

Who initiates prosecution?

Exclusively liquidator has a right apply to the court for the application of subsidiary liability to responsible persons.

In this case, creditors have no right to make such statements.

Who is responsible?

Founders (participants, shareholders), heads of the debtor, other persons who have the right to give mandatory instructions to the debtor or have the opportunity to otherwise determine his actions.

That is, the list of persons who may be subject to subsidiary liability is unlimited. The main condition is that by their actions they caused the bankruptcy of a legal entity. 

In the event that a person terminates his or her powers, he or she may still be subject to subsidiary liability.

What issues does the court investigate?

In order to determine whether it is necessary to impose subsidiary liability on those responsible, the court may examine the following issues:

1. What documents of financial and economic activities, primary documentation are available? Were tax returns filed?

2. What agreements have been concluded in the last three years before the opening of the bankruptcy proceedings and have the agreements been concluded after the opening of the bankruptcy proceedings?

3. At what point did the threat of insolvency of the debtor arise?

4. Are there any illegal actions or inaction of the debtor's governing body? Did the debtor suffer losses as a result of such actions or omissions? 

5. What actions and events caused the persistent insolvency of the debtor? Who is responsible for this? 

6. Is there the fault of specific individuals in the bankruptcy?

What actions can be considered to lead to bankruptcy?

    • The responsible persons acquire the property, in the absence of a real opportunity to pay for it. 
    • The responsible persons increase the debt of the enterprise without the intention to repay it.
    • The responsible persons decide on the withdrawal of the debtor's assets. As a result of these actions, the debtor became insolvent.

Can the liquidator not be held subsidiary liable?

If the liquidator has not investigated the issue of bringing the responsible persons to subsidiary liability, this can be challenged.

In this case, the creditor has the right to go to court and request the referral of the case to continue the liquidation procedure. 

Usually in this case, the courts satisfy the applications. If the liquidator has not clarified the possibility of assigning subsidiary liability for the obligations of the debtor - this is not the implementation of the full range of measures aimed at identifying the assets of the debtor.

Therefore, it is possible to receive funds from the debtor, even if he has no money or property to meet your requirements. However, the creditor cannot actively influence the bringing of responsible persons to subsidiary liability.


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