The rough period the Russian economy went through several years back determined the government to amend the Insolvency Law in order to accommodate the procedure of restructuring. If at this moment debt restructuring is available for individuals, Russian companies have several tools through which they can avoid insolvency and bankruptcy. These tools can be divided into two categories:
In the meantime, you can obtain information on the new Insolvency Law from our attorneys in Russia.
A Russian company facing financial distress can choose to undergo corporate restructuring in order to not shut down the business. A sound financial plan which can help it negotiate debt payments with the creditors or refinancing are the most common options Russian companies usually go for when facing restructuring. It should be noted that assistance from a team of accountant and Russian lawyers is advised in order successfully avoid bankruptcy. The company can also contract a loan to repay its debts. For this purpose, the Russian Civil Code was amended in order to allow creditors to conclude their own agreement related to the recovery of their amounts.
Financial rehabilitation remains one of the most employed corporate restructuring procedures in Russia and implies a meeting between the company management and the creditors where measures for paying the debts are discussed. It is important to know that financial rehabilitation can be asked by the company out of the court of justice or by the creditor in court.
The video below shows the main corporate restructuring methods in Russia:
Creditors have the right to ask a Russian company in the danger of going bankrupt to undergo restructuring with the purpose of recovering the amounts they are owed. In order to achieve that, they must file a petition with a Russian commercial court. However, debt restructuring ordered by court is possible only if the claims of the creditors exceed 300,000 rubles. Based on this claim, the court will issue a supervision order. Financial rehabilitation based on court proceedings in Russia cannot take more than 7 months.
For full information on all restructuring methods available for a company, please contact our law firm in Russia.
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