Suspension of a legal entity’s liquidation

Feb, 25 2020

Contents:

The official winding up of a legal entity is a difficult procedure which takes time and requires concerted actions of a huge number of professionals. First of all, executive bodies inform about the beginning of the procedure through the media, then they appoint a commission and draw up an interim balance. Once the debts are settled, the companies approve the final balance. It is also necessary to fire the employees, pay salaries and compensation to employees – and this is not the complete list of actions.

State authorities may initiate the suspension of liquidation of a legal entity on every stage. The procedure will be temporary suspended, if the tax inspection has some doubts about the reliability of the information which is expected to be included in the Unified state register of legal entities for verification. Liquidation issues are regulated by the article 9 of the “State Registration of Legal Entities and Individual Entrepreneurs Law “.

Suspension of a legal entity’s liquidation: reasons and grounds.

The Civil Code regulates the grounds for checking and suspending termination of LLC. Let us enumerate some reasons for suspending liquidation of a legal entity:

  • information submitted for registration contradicts information stipulated in the documents of territorial authorities;
  • liquidator about which the unreliability record is made in USRLE is involved
  • liquidator is brought to administrative responsibility for the wrongdoing which involves failure to submit information or false information about the company, and the term of punishment has not expired yet;
  • an interested person has raised objections to the upcoming procedure.

The suspension of liquidation of the legal entity can be performed due to the request filed by creditors. It happens when the enterprise has debts and the creditors are able to prove their claims. However, LLC owners themselves have the right to file the same request if they have enough reasons to suspend the procedure.

Arbitration court also has the right to suspend winding up of the business. Creditors are required to make a claim to arbitration court if they if they have not achieved suspension through the tax authorities. In such case lawyers prepare a claim to declare decision of winding up of LLC invalid. Also, individuals and legal entities to which the business has debts may require state authorities to take interim measures against the debtor. Such measures include, for example, seizure of bank accounts.

Arbitration court has the right to suspend the procedure on the basis of the debtor’s bad faith: foe example because of filing an incorrect balance sheet or wrongdoings concerning changing the name of an LLC. The fact that the company’s creditors haven’t been informed about the liquidation procedure can also be a reason for suspension. It means that liquidation is carried out with a breach of the requirements of the law. If the enterprise doesn’t have enough money to pay all the debts, the liquidation commission must declare bankruptcy.

How should a creditor act in case of the debtor’s business liquidation

One of the reasons to suspend the liquidation of a legal entity by tax authorities is inability to meet loan obligations. Thus, we recommend examination of contractors before lending them money: whether they would be able to repay the debt or whether there is a risk of bankruptcy. Moreover, the personal assets of the LLC owners aren’t at stake in a case of bankruptcy.

When the liquidation procedure is started the creditors receive a notice. The commission publish the information in the official media and fixes the term during which the creditors may file their claims. Such term doesn’t exceed two months, that’s why you shouldn’t hesitate. The creditors have the right to apply to arbitration court and claim the suspension of the procedure or to recover damages from the liquidators.

For which term the procedure can be suspend

The tax authority allots short period of time for the suspension of legal entity’s liquidation: calendar month. It is impossible to pause the procedure for a longer period. The decision is taken within 5 working days after the documents were filed to the tax authorities.

The authorities send the decision to email address of the LLC specified in the application. The information is also posted on the official state website. Such provision is states in the article 9 of “State Registration of Legal Entities and Individual Entrepreneurs Law “.

After the examination term expires the suspension of the legal entity’s liquidation is automatically considered completed. State authorities should either make a decision on registration or refuse it.

It should be noticed that LLC has the right to provide written explanations during the process of suspending the liquidation of a legal entity in order to make an influence on the examination. In case of refusal of the state registration, the company has the right to appeal against the decision, however, the period of time for filing an appeal is limited.

If the LLC ceases to conduct business activity, it should be also considered that it is not possible to start drawing up an interim balance until tax or customs inspection is completed or until the court decision enters into force. This issue is regulated by the article 20 of the “State Registration of Legal Entities and Individual Entrepreneurs Law “.

Qualified assistance in liquidation of legal entity

VALEN will help you to perform the company’s liquidation procedure effectively and in the shortest possible time. We offer comprehensive support for companies that are planning or have already started winding up, help with the registration of documents and their submission to official authorities.

Please contact us and we will provide a detailed advice on issues that may arise when suspending the liquidation of a legal entity by the tax service. To contact our lawyers, leave a request on the site or dial the numbers listed at the top of the page!

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