Relations between business enterprises are based on mutual benefit. The nature of such interactions can be any. For example, one enterprise acts as a supplier of meat, and the second as a manufacturer of sausages. However, regardless of the specific activities of each company, in all respects, one of them is a creditor, and the other is a debtor.
Business challenges
In the business sphere, interaction between entities is not always carried out without problems. The debt of one enterprise to another, if it is short-term in nature and is determined by the need for some time to make a payment, is considered normal and usually does not cause anxiety among partners. But in some cases, the company is not able to repay its obligations, and therefore declares itself bankrupt. In this situation, the counterparty can act as a competitive creditor of the debtor. Let us further consider the features of this status.
General information
Competitive creditors are economic entities to which the company has outstanding monetary obligations. The legal status of such persons is determined in Federal Law No. 217 "On Bankruptcy (Insolvency)". From the definition given in the law, it follows that entities to which the company has obligations expressed in kind cannot act as bankruptcy creditors. This fact is a key distinguishing feature of these individuals. For example, between the manufacturer of sausages and the meat supplier, a contract was signed for the supply of 100 tons of pork. In exchange for raw materials, the manufacturer agreed to provide the company with 40 tons of finished products. If the manufacturer has violated the terms of the agreement, then the supplier in this case cannot be a competitive creditor.
Exceptions
It is worth saying that not all entities to which the bankrupt company has monetary obligations can act as competitive creditors. This exception is provided for in Federal Law No. 127. The law states that a bankruptcy creditor cannot be a citizen to whom the company has a debt that has arisen in connection with damage to his health and life or moral harm, as well as persons empowered with a legal opportunity to receive remuneration from the use of bankrupt products of intellectual work, and some other categories.
Going to court
The legislation establishes certain rights of a bankruptcy creditor. One of the main features is the opportunity to appeal to arbitration. In practice, it is the statement of the bankruptcy creditor that acts as the basis for declaring the entity bankrupt. The person who goes to court must take into account that the criteria for insolvency are clearly established in Federal Law 127 (Article 3). The norm also says that bankruptcy proceedings against a legal entity can be initiated if it has not fulfilled its financial obligations within three months from the date established by the contract.
Meeting of creditors in bankruptcy proceedings
In addition to being able to go to court, legislation provides another important guarantee for victims. Often the company has not one but several obligations to different counterparties. If it is declared bankrupt, a meeting of bankruptcy creditors is held. All persons to whom the company has obligations may participate in such a meeting. They are vested with the right to vote when discussing the most pressing issues related to bankruptcy proceedings. Their opinion is taken into account in the decision-making process related to the organization of observation, external management or financial recovery.
Important point
Federal Law No. 127 provides for a list of issues related to the conduct of bankruptcy proceedings, decisions on which are made exclusively during the general meeting of bankruptcy creditors. These include, in particular, the approval of a financial recovery plan , the determination of an arbitration manager who will perform all legally significant actions during the recognition of the insolvency of the entity, the adoption of a compromise schedule for paying off obligations, etc. A complete list of issues to be considered by the meeting of creditors is set out in paragraph 2 12 articles of the above law.
Benefits
Federal Law No. 127 establishes a number of priority rights for certain bankruptcy creditors. For example, if an enterprise acts as a holder of an outstanding liability on a large scale, then the regulatory act provides it with the opportunity to initiate discussions on the insolvency of the counterparty. This company can independently develop the agenda of the meeting, including issues of greatest relevance to it. This provision applies to entities that hold 10% or more of the total outstanding financial liabilities of the entity to which the bankruptcy procedure applies.
Financial claims
The claims of creditors in bankruptcy proceedings are recorded and systematized by the arbitration manager. This entity is responsible for implementing the statutory mandatory procedures. In particular, it forms a register of bankruptcy creditors. When presenting their financial claims, enterprises must submit documents confirming their availability. The arbitration manager, having considered the requirements of the bankruptcy creditor, makes a decision on recognizing him as legitimate (legal and justified). If the assessment is positive, the specialist will send a request to the company for additional information to make appropriate entries. Information, in accordance with article 16 (paragraph 7) of Federal Law No. 127, must be indicated in relation to all creditors. Such data include the name of the legal entity, bank details, address of the location. If the creditor is a citizen, then, respectively, his full name, address of residence, passport data are indicated.
Additionally
After the financial claims are entered into the register, the bankruptcy creditor may request an extract from it. It will contain data on the composition and amount of obligations to be satisfied. In addition, the statement indicates the sequence within which financial claims will be fulfilled. The arbitration manager is required to submit the document within five days from the date of receipt of the relevant request.
Nuance
There are a number of special legal opportunities vested in competitive lenders. This primarily applies to enterprises whose legitimate financial claims amount to at least 1% of the total. Such companies can receive not only an extract. They are entitled to request a certified copy of the entire registry.
Legal implications
The legislation defines a number of circumstances arising in connection with the start of bankruptcy proceedings. The following facts serve as legal consequences:
- The term for the implementation of financial obligations that arose prior to the commencement of the procedure is considered to have come.
- Accrual of forfeits, interest and other sanctions ceases. The exception is current payments and rates provided by law.
- Information on the financial position of a bankrupt enterprise is no longer considered confidential and related to trade secrets.
- The implementation of transactions relating to the disposal of property or involving its transfer to third parties in operation, is allowed only according to the rules of bankruptcy proceedings.
- Execution for all of the ILs to be transferred to the FSSP to the arbitration manager is terminated.
- All financial claims for financial obligations, payment of tax and other amounts may be made only within the framework of bankruptcy proceedings. The exception is current deductions, claims for non-pecuniary damage, for the recognition of property rights or invalidity of void transactions, for the recovery of material assets from illegal someone else's possession.
- The arrest previously imposed on the property of the enterprise is lifted, other restrictions related to the disposal of material values are canceled. This procedure is carried out in accordance with a court decision. A new arrest is not allowed.
- Repayment of the obligations of the bankrupt company is carried out by the arbitration manager in the manner and in cases specified by law.
Priority
The legislation establishes a specific procedure for satisfying claims made by bankruptcy creditors. This is necessary to implement the principle of legality and validity, to protect the interests of participants in the procedure. Out of turn, claims are satisfied:
- Concerning court costs arising from the start of the insolvency process, payment of remuneration to the arbitration manager, payment for the services of persons involved as specialists.
- According to the salaries of entities working under labor agreements.
- For utility, maintenance payments, which are necessary for the activities of the bankrupt enterprise.
- For other current deductions.
The following requirements are met:
- Citizens whose health or life was harmed.
- On the provision of severance pay, the salary of employees who worked or are in the state at the time of the procedure in accordance with the employment contract, on the payment of remuneration to the authors of products of intellectual activity.
- Other creditors, including net liabilities.
Final stage
After settlements with creditors are completed, the manager forms an act on the results of production. Together with the report are presented:
- Documents confirming the sale of property of a bankrupt enterprise.
- Register of claims indicating the amount of repaid obligations.
- Documents certifying the satisfaction of claims.
After reviewing the report and the annexes, the arbitral tribunal shall determine the end of the proceedings. This act acts as the basis for entering into the USRLE information on the liquidation of a bankrupt enterprise.