The formation and development of a market economy is accompanied by various, sometimes contradictory, processes that take place within the framework of current legislation. As practice shows, bankruptcy of legal entities occurs for various reasons. In general, this procedure is regulated by a special Law on Insolvency (Bankruptcy). In its original form, this Law was intended to provide a more efficient transfer of capital to those areas of activity that are developing more dynamically.
For this, it is necessary to remove from the market enterprises that are not able to fulfill their obligations to the required extent. So that they, so to speak, do not interfere with stronger partners to supply appropriate goods and services to the market. Weak management and inaccurate actions when doing business can lead any enterprise to a deplorable state. I must say that this is not a legal term. Bankruptcy of legal entities as a mechanism is included in very specific circumstances. If a company barely makes ends meet, this is not a reason to launch it.
However, in the case when, within a certain period of time, the enterprise cannot fulfill its obligations, one of the interested parties may demand its liquidation. Such a person may be a state. This becomes possible when taxes and mandatory payments to state funds are not made for three months or more. For example, a pension fund may initiate this process. Bankruptcy of legal entities is possible only by decision of the arbitration court. It is in this court that the corresponding statement should be sent.
It often happens that a company is not able to settle accounts with suppliers of raw materials and components. In this case, the mechanism for initiating insolvency or bankruptcy proceedings looks similar. The interested person applies to the arbitration court, which can take the appropriate decision. And this decision may not be at all what the plaintiff would like to receive. After the court considers the application, the monitoring procedure is introduced at the enterprise. The court oversees the situation at the enterprise.
Practice shows that very often enterprises in this state have debts for which you can still pay. But if the situation does not improve even with external monitoring, a bankruptcy trustee is appointed by the decision of the same court. His responsibilities include satisfying the claims of creditors. He organizes the valuation and sale of the property of the enterprise, so that from the proceeds to settle with all creditors. Of course, such liquidation with debts does not fully satisfy the requirements of creditors.
The fact is that all the property that can be sold and the balances on the accounts are never enough to close all the obligations of the enterprise. Qualitatively, the same situation occurs when liquidation of entrepreneurs with debts is carried out . There are many concrete examples. The entrepreneur takes a big loan and buys fashionable hats with this money. However, in a short time, fashion changes, and consumers stop buying these products. That's all, such a product is already impossible to sell even at the purchase price.
It is good if the bankruptcy trustee manages to gain 10% of the cost for them. This means that lenders will receive about the same proportion of their claims. Thus, the bankruptcy of legal entities or individual entrepreneurs does not always allow lenders to return their financial resources. It follows from this that loans should be issued more carefully and taking into account the solvency of the borrower's company.