Moratorium on Bankruptcy
In 2020, in order to support business during pandemic, the Federal Law "On Insolvency (Bankruptcy)" was supplemented with a new Article 9.1, which introduced the concept of a moratorium, that is, a temporary suspension of filing applications for bankruptcy of certain enterprises.
What does it all mean?
In order to ensure the stability of the country's economy, in exceptional cases (for example, in an emergency) and for any period of time, the Government may suspend the right to initiate bankruptcy proceedings based on applications filed by creditors. At the same time, self-bankruptcy is not prohibited.
Interestingly, the list of circumstances for the introduction of the moratorium is open, but the law separately highlights “significant change in the ruble exchange rate” as a separate reason why the Government may suspend the initiation of bankruptcy proceedings. However, the criteria for materiality are not entirely clear, and so far this issue has not been resolved in practice. Probably it is set aside until the next crisis hits.
Who does it apply to?
- only for those companies and persons that will have OKVED codes determined by the Government at the time of the moratorium, that is, to be engaged in fields that have suffered as a result of the circumstances that served as the basis for the introduction of the moratorium.
- only for those companies and individuals in respect of which a bankruptcy case was not initiated at the time of the moratorium.
Какиепоследствия?
The following rules apply to companies and persons for the period of moratorium:
- no creditor can apply to declare such company or a person bankrupt.
- any sanctions (penalties, interest for the use of funds, forefeits) are not charged or collected, unless it is proved that the company did not suffer from the circumstances that served as the basis for the imposition of the moratorium.
- enforcement proceedings are suspended. Exception: claims for compensation for harm caused to life or health, for the payment of wages and severance pay, for the payment of alimony.
- a ban is introduced on the collection of pledged property, including out of court.
- a ban on the payment of dividends is introduced.
- a ban is established on meeting the requirements of founders who are trying to leave the company and take their share.
- a ban is established on the termination of monetary obligations by offsetting a homogeneous counter claim.
Is it possible to refuse?
Certainly, the company can at any time, on its own initiative, get out of the moratorium. To do this, it must submit an application to the Unified Federal Register of Bankruptcy Information. The waiver of the moratorium comes into force exactly from the date of such publication, but the consequences of the moratorium do not apply from the day the moratorium has been introduced.
Case history:
According to present knowledge, the bankruptcy moratorium was introduced only once and was in effect from April 06, 2020 to January 07, 2021.
There has not yet been a sharp increase in the number of bankruptcies after the lifting of the moratorium, so the effect of the cancellation has not been observed. However, in general, the difficult state of the world economy might play its role and lead to a rapid increase in bankruptcy of enterprises.
Anyway, TEAM closely monitors the latest market trends and legislative changes and is always ready to give you high-quality advice on this matter!