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Publication date: 20.05.2024
lawyer, 23 years of experience in enforcement.
The procedure for initiating a bankruptcy case for an individual and a sole proprietorship.
The procedure for initiating a bankruptcy case for an individual and a sole proprietorship.
In situations where the debtor is a natural person, has significant debts to various banking or financial institutions and lacks the financial ability to pay them, the current legislation provides for a bankruptcy procedure for a natural person, after which all outstanding debts are subject to write-off.
So, what must be done to declare an individual bankrupt:
According to the norms of Art. 115 of the Code of Ukraine on Bankruptcy Procedures (hereinafter - the Code), the opening of proceedings in the case of insolvency of a debtor - a natural person or a natural person-entrepreneur is possible only at the request of the debtor himself.
The grounds on which the debtor has the right to apply to the commercial court with an application to open insolvency proceedings are established in Part 2 of Art. 115 of the Code.
The norms of Article 116 of the Code stipulate requirements for the content of the application, requirements for the documents attached to it.
Before the application, the debtor is obliged to submit proposals for debt restructuring (draft debt restructuring plan), a declaration of property status for the 3 (each year separately) years preceding the submission to the court of an application for opening insolvency proceedings.
In accordance with the provisions of Art. 117 of the Code of Ukraine on Bankruptcy Procedures, if there are no grounds for refusing to accept the application, the court shall issue a decision on accepting the application for consideration no later than 5 days after the date of receipt of the application.
The grounds for refusing to accept an application to open proceedings in the case are provided for in Article 37 of the Code.
If there are grounds provided for in Art. 174 of the Economic Procedural Code of Ukraine, the court leaves without motion the application for opening proceedings in the case.
Article 38 of the Code of Ukraine on Bankruptcy Procedures establishes the grounds for which the court returns the application without consideration. The return of the application for the initiation of bankruptcy proceedings does not prevent the repeated application of such an application to the commercial court in the prescribed manner.
In accordance with Part 2 of Art. 117 of the Code of Ukraine on Bankruptcy Procedures, the court has the right to decide on the issue of:
- the obligation of the debtor and other persons to submit to the court additional information necessary to resolve the case;
- taking measures to ensure the demands of creditors by prohibiting the debtor from alienating property.
According to Art. 118 of the Code, the court has the right, at the motivated request of the parties or on its own initiative, to take measures to ensure the demands of creditors. Part 2 of the said article establishes a list of such measures.
The decision to open proceedings takes effect from the moment it is issued.
Part of the 5th Art. 119 of the Code of Ukraine on Bankruptcy Procedures establishes the information that is specified in the decision to open proceedings in the case of the debtor's insolvency.
In accordance with Part 2 of Art. 122 of the Code of Ukraine on Bankruptcy Procedures, the preliminary court session is held no later than 60 days after the opening of insolvency proceedings.
No later than 10 days before the day of the previous meeting, the restructuring manager is obliged to send the court, creditors and the debtor a report on the results of checking the debtor's declaration.
According to part 4 of Art. 122 of the Code of Ukraine on Bankruptcy Procedures, the decision based on the results of the previous meeting states:
- the obligation of the restructuring manager to hold a meeting of creditors, which must be held no later than 14 days after the date of such resolution;
- the date of the meeting of the commercial court, which must be held no later than 60 days from the date of such resolution, at which the debt restructuring plan agreed by the creditors will be considered or a decision will be made to proceed to the debt repayment procedure or to close the proceedings in the case.
Part 1 of Art. 123 of the Code of Ukraine on Bankruptcy Procedures establishes that within 3 working days after the decision is made based on the results of the previous session of the commercial court, the arbitration administrator, in accordance with this decision, notifies the creditors in writing about the place and time of the meeting of creditors and organizes their holding.
During the meeting, the following is carried out:
- consideration of the report of the restructuring manager on the results of the verification of the declaration of the debtor's property status;
- consideration of the project of the debtor's debt restructuring plan;
- making a decision on approving the debtor's debt restructuring plan or on petitioning the commercial court to move to the debtor's debt repayment procedure, or on closing insolvency proceedings.
The debt restructuring plan and changes to it are considered approved if they are supported by all secured creditors and at least 50 percent of bankruptcy creditors.
In accordance with Part 8 of Art. 123 of the Code of Ukraine on bankruptcy procedures, based on the results of the meetings, a decision is made:
- on approval of the debtor's debt restructuring plan;
- on refusal to approve the debtor's debt restructuring plan;
- about applying to the commercial court with a request to close the debt restructuring procedure in connection with the failure or impossibility of implementing the debt restructuring plan and the introduction of the debtor's debt repayment procedure.
In accordance with Part 1 of Art. 130 of the Code of Ukraine on Bankruptcy Procedures, the commercial court adopts a resolution on recognizing the debtor as bankrupt and introducing the procedure for repayment of the debtor's debts in the event that within 120 days from the date of the opening of insolvency proceedings, the meeting of creditors has not adopted a decision on the approval of the debtor's debt restructuring plan or a decision on transition to the debtor's debt repayment procedure.
By this resolution, the court also appoints a property manager.
The notification of declaring the debtor bankrupt and introducing the debtor's debt repayment procedure is published on the official web portal of the judiciary of Ukraine within 3 days from the date of adoption of the relevant court decision.
The last stage of the bankruptcy procedure is the repayment of the debts of an individual and an individual entrepreneur, which takes place in accordance with the Code of Ukraine on bankruptcy procedures.
Therefore, declaring a natural person bankrupt or bankrupting a fop is a fairly effective way to get rid of debt collectors.
Specialists of the legal service "Consultant" will conduct a legal analysis of the situation, help to prepare and submit an appropriate application to the court, and accompany the bankruptcy of an individual at all stages.
