Personal vs Corporate Bankruptcy in Russia

Both personal and corporate insolvency in Russia are governed by one federal law on bankruptcy and heard by arbitrazh courts. The aims differ, though. An individual goes through bankruptcy to be released from debts and start again. A company goes through it to be liquidated, with its assets sold for creditors. For owners and directors the real danger is often not the company's bankruptcy itself but personal liability that follows it.

Attorney Elena Petrova represents debtors, creditors and company directors in insolvency proceedings.

Procedures for Individuals

A citizen may file for bankruptcy personally, and must do so when debts exceed a threshold and cannot be paid. The court introduces debt restructuring if the person has a stable income and a realistic plan. Otherwise it moves to the sale of assets. A settlement with creditors can end the case at any stage.

Since 2020 there is also an out-of-court procedure through multifunctional public service centres. It is open to people with modest debts, no property to recover and closed enforcement proceedings.

Procedures for Companies

A company passes through observation, then financial rehabilitation or external management if recovery is possible, and finally bankruptcy proceedings when it is not. In practice most cases go quickly to the last stage.

A court-appointed manager takes control of the company, collects assets, challenges suspicious deals and sells property at auction. Directors lose their powers.

Main Differences

Feature	Individual	Company
Typical result	Release from remaining debts	Liquidation and removal from register
Assets protected	Sole home, basic belongings, part of income	None
Who is at risk afterwards	The debtor, through restrictions	Directors and owners, through subsidiary liability
Duration	Often months	Often years

Release From Debts

An honest individual is released from most debts at the end of the procedure. Some claims survive: alimony, compensation for harm to life or health, and debts arising from fraud or deliberate concealment of assets. If the court finds bad faith, it may refuse the release altogether.

A company is not released in this sense. Its debts disappear with it, unless someone else can be made to pay them.

Risks and Consequences

After personal bankruptcy the person must mention it when borrowing for five years and cannot manage a company for three years. Transactions made before the case, such as gifts to relatives or sales below market value, can be declared void and the assets returned.

For a company, the main risk is subsidiary liability. Controlling persons, including shadow owners, may be ordered to pay unpaid debts personally. Grounds include failure to file for bankruptcy in time, missing accounting records and asset stripping.

Transactions That Can Be Unwound

In both procedures the manager reviews deals made in the years before the case. Suspicious transactions can be challenged if they harmed creditors and the other side knew or should have known. Preferential payments to one creditor shortly before the case are also at risk.

Planning Before Filing

The steps depend on who you are. A private debtor should list all debts and assets and avoid moving property. A director should check whether the duty to file has already arisen and collect board decisions showing reasonable conduct.

Petrova reviews documents, estimates risks of challenge and liability, and prepares the filing or the defence.

The main channel of communication with the attorney is email: attorneypetrova1@gmail.com.