Amendments to legislation concerning enforcement of creditors’ rights and legal interests in bankruptcy cases of legal entities

The amendments to the federal laws as of 08.02.1998 №14-FL «On limited liability companies», 08.08.2001 №129-FL «On incorporation of legal entities and sole entrepreneurs», 26.10.2002 №127-FL «On insolvency (bankruptcy)» were introduced by the federal law as of 28.12.2016 №488-FL «On introduction of amendments to certain legislative acts of the Russian Federation».

In summary the introductions come to the following regulations.

1. Removal of limited liability company (LLC) from the Unified State Register of Legal Entities (EGRUL) in the manner established for inactive legal entities leads to refusal of the primary debtor to meet obligations. It is introduced in the Civil Code of the Russian Federation. If such refusal occurred due to the fact that persons representing the legal entity (collegial body members or identifying the activities of legal entity) acted against all sense or in bad faith, the subsidiary responsibility is laid on such persons for obligations of this legal entity upon application of the creditor.

2. Liquidation term of LLC (by the decision of its members or units that made decision on liquidation) shouldn’t exceed 1 year. The term may be extended no longer than for 6 months only in a judicial procedure.

3. From now on the EGRUL will include the following data:

• - on commencement of bankruptcy proceedings of legal entity,
• - on procedures carried out in bankruptcy proceedings in relation to legal entity.

The amendments introduce the procedure of making these entries in the EGRUL as well.

4. It is forbidden to make decision on the forthcoming striking-off of the legal entity from the EGRUL when the registration unit has the following data:

• - on commencement of bankruptcy proceedings,
• - on carried out procedures in bankruptcy proceedings.

5. The same procedure of the legal entity removal from the EGRUL is used in the following cases:

• - inability to liquidate the legal entity due to lack of money for liquidation expenses,
• - inability to fix shareholders or other members with such expenses,
• - availability in the EGRUL of the data with an entry concerning its corruption, during more than 6 months from the moment of making such an entry.

Amendments were as well introduced into the procedure of bringing to the subsidiary responsibility of persons controlling the debtor.

The law comes into effect on the expiry of 180 days from the day of its official publication, excluding several particular provisions.

According to experts, the adopted measures on enforcement of creditors’ rights and legal interests in bankruptcy cases of legal entities take on particular relevance currently due to the fact that following the results of 2016 the number of liquidated companies in Russia goes beyond newly established by record 282 th. According to the Federal Tax Service of the RF, this significant amount was recorded for the first time throughout data collection in the EGRUL.

For more on – see our publication “Decreasing number of companies in the Unified State Register of Legal Entities” in the Credinform Newsletter.