Liquidation of a legal entity with debts without bankruptcy

Jan, 16 2024


Liquidation of a legal entity with debts without bankruptcy is a complex multi–stage procedure that must be carried out by qualified lawyers. It requires careful observance of the letter of the law. The grounds for it, as well as the procedure for the actions of the enterprise and its debtors are described in federal laws, including such a legislative act as “On insolvency (bankruptcy)”.

It is much more difficult to close an LLC in the presence of debts to partners or the state than to curtail the activities of an enterprise that has no obligations to third parties. Creditors may at any stage demand that the liquidation of a legal entity with debts be stopped, even if there is no question of bankruptcy.

When a company does not cope with business, there is no profit, but only losses, it is not always possible to recognize an LLC as insolvent. This is not possible if the conditions do not fully comply with those described in the law. However, it is pointless and even dangerous to continue working, because it is fraught with further costs and losses. What should the founders do in such a difficult situation?

There are several ways to liquidate a legal entity with debts without bankruptcy. The choice depends on the size of the debt, the reasons for its formation and many other factors. Having assessed the financial situation of the company, it can be liquidated in one of the following ways:

  • voluntarily – on the initiative of the founders;
  • forcibly – by court decision;
  • through reorganization;
  • through bankruptcy.

All of the above methods guarantee that the company will be excluded from the Unified State Register of Legal Entities. However, recognition of a commercial firm as unable to fulfill its obligations is the worst possible scenario, since it entails loss of business reputation, increased risks in the future, the likelihood of fines and many other unpleasant consequences.

This method of termination of the company’s activities is used if it is able to pay off loans. Usually, the voluntary abolition of a business is a complex and time–consuming process, it requires the involvement of qualified lawyers who will help settle all issues in an optimal way, without sanctions and fines. The initiators of the procedure in such a situation are its founders or the executive body authorized to do so by the constituent document.

Stages of voluntary termination of the company’s work:

  1. Adoption of a decision on the abolition of a legal entity by its founders.
  2. Appointment of the liquidation commission.
  3. Publication of data on the abolition of the company in the professional press, notification of each creditor. From the moment of publication, creditors have 2 months to make claims. All interested people and businesses that can make their claims are entered in a special register. This is an important document, according to which the company will pay its debts in the future. If creditors have not submitted claims before the interim liquidation balance sheet is drawn up, the amount of debt is credited to the company’s income item. But the notification of the preparation of an interim liquidation balance sheet cannot be submitted to the authority earlier than the deadline that the law assigns to creditors so that they can declare their claims and receive payments. Thus, after the company pays taxes and fees on the amount owed, it is considered repaid.
  4. Formation of an interim liquidation balance sheet: a document according to which the company will continue to pay off creditors.
  5. Satisfaction of creditors’ claims.
  6. Formation of the liquidation balance. It is compiled by the liquidation commission in the period from the moment of satisfaction of creditors’ claims and until the date of entry in the Register of Legal Entities on the abolition of the company’s activities. In order to successfully stop the company’s work, the liquidation balance must be “zero”, and also approved by the founders of the legal entity.
  7. Submission of documents to the tax authorities. The list of papers includes an application, a liquidation balance sheet, a receipt for payment of state duty and a document confirming the provision of information to the Pension Fund of the Russian Federation on the abolition of the enterprise.

Only after completing all the formalities and the appearance of an entry in the register can it be considered that an LLC or other form of doing business has officially ceased to exist. How much the procedure will cost, how much time it will take, depends on the circumstances and qualifications of the lawyers leading the process.

According to Article 61 of the Civil Code of the Russian Federation, it is possible to forcibly abolish the existence of a business only by a court decision. A state body or a local self-government body may apply to the court. In practice, a court decision may impose the obligation to abolish the company on the founders or state authorities who can work with the constituent documents. From the point of view of professional reputation for entrepreneurs, this is not the best option, but sometimes it is optimal.

Bodies that can file a claim for compulsory liquidation of a legal entity with debts without bankruptcy:

  • registration authorities;
  • prosecutor’s office;
  • tax authorities;
  • antimonopoly authorities;
  • The central bank.

You can save the company by reorganizing. Russian laws offer such options for liquidation of a legal entity with debts without bankruptcy: merge, join, split, highlight, transform. In all cases, the firm actually ceases to exist, but may become part of another enterprise.

It is not necessary to liquidate the business directly, and the founders continue to be responsible for the company’s activities and debts. However, in any form of reorganization, creditors must be notified, and they have the right to stop the process.

One of the most practical ways to liquidate a legal entity with debts without bankruptcy is to join. The General Meeting of the founders decides on the reorganization, after which they begin preparing:

  • notify the state registration authority of the beginning of the reorganization process;
  • they are taking inventory;
  • they publish in the media reports on reorganization by joining: twice with a frequency of once a month;
  • notify creditors of the upcoming reorganization in the form of accession;
  • make up a transfer act;
  • they pay state duties.

According to Article 58 of the Civil Code, when a legal entity joins another legal entity, the rights and obligations of the affiliated company are transferred to the latter. This can significantly ease the credit oppression – of course, if another company takes such a step.


Liquidation of a legal entity with debts without bankruptcy is a better way out of the situation than publicly declaring the business insolvent. However, sometimes such an unpleasant procedure as bankruptcy cannot be avoided, and this is the best way to terminate the business. Be patient: the process may take from 2 to 4 years. Each stage of the company’s abolition through the recognition of its insolvency can take about a year.

For the owners of LLC – good news: when declaring a business bankrupt, they do not risk their own property. Grounds for declaring a company bankrupt:

  • inability to pay off debts;
  • inability to pay severance payments and wages;
  • non-fulfillment of financial obligations after three months.

Our services

VALEN company will help to carry out the procedure of liquidation of a legal entity with debts without bankruptcy efficiently and quickly. We offer comprehensive support for a business that is planning or has already started a business shutdown. Our qualified lawyers will help you to draw up documents, submit them to official authorities, get the necessary certificates and permits. We will do everything in a short time, with minimal risks for the company, even if the situation is unfavorable.

Contact us and we will advise you in detail on issues related to the liquidation of a legal entity with debts, but without bankruptcy. We are waiting for your applications via the website or by phone: +7 (495) 7-888-096!

Author of the article
Liquidation of a legal entity with debts without bankruptcy
Valentina Khlavich
Managing Partner
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