MATERIAL LIABILITY OF MANAGERS AND BUSINESS OWNERS FOR COMPANY’S DEBTS SHALL BECOME MORE SEVERE

Apr, 28 2017

New amendments to the bankruptcy laws shall come into force on June 28, 2017. The purpose of amendments is to protect rights of creditors during bankruptcy proceedings. Under new amendments unfair companies will not be able to avoid paying debts through liquidation.

Innovations of legislation are as follows:

1. The period of liquidation procedure is limited by 1 year. If necessary, liquidation procedure can be prolonged for 6 more months by court decision.

2. Information about bankruptcy procedure shall be contained in the Unified State Register of Legal Entities (the Register). The purpose of such measure is to prevent the exclusion of the company from the Register by a decision of the tax authorities, if bankruptcy proceedings were initiated against such company.

3. Creditors are entitled to sue managers and owners of business for the company’s debts. In this case, creditors shall prove the fact of bad faith or unreasonable actions of company’s managers or owners, which lead to the bankruptcy. Limitation period is three years from the date of conclusion of the bankruptcy proceedings.