In accordance with the Law of the Republic of Belarus “On Economic Insolvency (Bankruptcy)”, the system of measures for the bankruptcy of an enterprise involves a number of procedures. The bankruptcy procedure is an event applied in relation to the enterprise – the debtor. The main purpose of these measures is to resolve property disputes between the debtor and creditors. In accordance with the law, the following procedures apply to the debtor: a protective period, bankruptcy proceedings, a settlement agreement.
The protective period is a bankruptcy procedure that is aimed at verifying the existence of grounds for initiating bankruptcy proceedings and ensuring the safety of the debtor’s property. This procedure is carried out with the participation of an interim administrator appointed by the economic court. Supervision is introduced from the moment the economic court accepts the application for the recognition of the debtor as bankrupt. The activities of the enterprise during the protective period are carried out with a number of significant restrictions.
Thus, the introduction of supervision is not a basis for the removal from work of the heads of the debtor enterprise. However, the management bodies of this enterprise are not entitled to make transactions and fulfill payment obligations without the written consent of the interim manager, to make decisions on reorganization, creation of branches and representative offices, payment of dividends, issue of securities, withdrawal from the founders.
The duties of the interim manager are:
inventory of the debtor’s property and ensuring its safety; examination of financial and economic activities; accounting of all creditors and debtors; analysis of the financial condition and solvency of the debtor, etc.
At the end of the protective period, lasting no more than 3 months, the interim manager submits a report to the economic court, on the basis of which the court may decide either on the opening of bankruptcy proceedings or on the termination of bankruptcy proceedings in the absence of grounds.
If the implementation of measures to restore the solvency of the debtor, provided for in the plan for the completion of pre-trial rehabilitation in the protective period, made it possible to restore the solvency of the debtor, the bankruptcy case is terminated. Otherwise, bankruptcy proceedings are initiated, the additional basis for which is the presence of a ratio of security of financial obligations with assets of more than 0.85.
From the moment of the decision, the interim manager is relieved of his duties.
Bankruptcy proceedings are bankruptcy procedures carried out in order to satisfy the claims of creditors, protect the rights and legitimate interests of the debtor. It applies if, during the protective period, a stable insolvency of the debtor has been established and proved.
With respect to the debtor enterprise, the economic court may decide on its reorganization or liquidation. Bankruptcy proceedings with reorganization are carried out if there is a real possibility of financial rehabilitation of the enterprise, otherwise bankruptcy proceedings with liquidation take place.
During the period of bankruptcy proceedings:
the head of the debtor enterprise is removed from office, and the powers of its management bodies are suspended; an anti-crisis manager is appointed; a moratorium on the satisfaction of creditors’ claims is introduced; the accrual of interest, penalties, fines and other sanctions on all types of debt is suspended.
The anti-crisis manager, in the exercise of his powers, is obliged to:
manage the enterprise; develop a plan for the rehabilitation or liquidation of the debtor; conduct an inventory of the debtor’s property and ensure its safety; take measures to protect the rights of members of the labor collective; maintain a detailed register of creditors and debtors; in the event of liquidation of the enterprise, organize the sale of its property (bankruptcy estate) and the proportionate satisfaction of creditors’ claims.
The term of bankruptcy proceedings with reorganization is 18 months and can be reduced or extended by the decision of the economic court for one year, and with liquidation – does not exceed 12 months and can also be extended for another 6 months.
In the case of bankruptcy proceedings with liquidation, the anti-crisis manager after the sale of the property of the bankrupt enterprise makes settlements with creditors in accordance with the register of creditors’ claims. Out of turn, court costs, expenses related to the payment of remuneration to the manager, current utility and maintenance payments of the debtor, as well as creditors’ claims for the obligations of the debtor enterprise arising during the bankruptcy proceedings are satisfied. Further, the claims of creditors are satisfied in the following order:
First of all, the claims of citizens to whom the debtor enterprise is responsible for causing harm to life or health are satisfied by capitalizing on appropriate temporary payments; secondly, calculations are made on the payment of severance payments and remuneration with persons working under an employment contract (including under a contract), and on the payment of remuneration under copyright contracts; thirdly, the requirements for mandatory payments are satisfied; in the fourth place, the claims of creditors for obligations secured by a pledge of the debtor’s property are satisfied; in the fifth place, settlements with other creditors are made.
After the completion of settlements with creditors, the bankruptcy administrator is obliged to submit to the economic court a report on the results of the bankruptcy proceedings. After considering this report, the commercial court makes a decision on the completion of bankruptcy proceedings, which is the basis for making a record of the liquidation of the debtor enterprise in the Unified State Register of Legal Entities.
A settlement agreement is a bankruptcy procedure concluded between the debtor and bankruptcy creditors at any stage of the bankruptcy proceedings of the enterprise and allows the debtor to secure its obligations without the use of liquidation. It can be concluded only after repayment of the debt on the claims of creditors of the first and second stage. Approval of the settlement agreement by the commercial court is the basis for the termination of bankruptcy proceedings.