40 features of bankruptcy of individual entrepreneurs. Bankruptcy of individual entrepreneurs: answering pressing questions from readers

Entrepreneurs often conduct active business activities and sometimes even outstrip legal entities in terms of turnover. Just like companies, they bear the risk of losses and being financially insolvent. Let's consider what features bankruptcy of individual entrepreneurs has.

What are the features of bankruptcy of individual entrepreneurs?

Entrepreneurs have a special status, which is reflected in the procedure and grounds for recognizing their insolvency. The grounds for declaring an individual entrepreneur bankrupt are given in Art. 214 of the Insolvency Law - the inability of an entrepreneur to pay off his creditors and pay off budget debts.

Creditors, including tax or other competent authorities, can insist on bankruptcy of an entrepreneur. The grounds must be as follows:

• Total debts to creditors are more than 500 thousand rubles.
• The debt arose more than 3 months ago.

The entrepreneur himself has the right to go to court if:

• The debt to creditors or the budget has reached such proportions that it has become impossible to repay it due to lack of money.
• The entrepreneur's total debt is greater than the value of his assets.

Pay attention! If an entrepreneur has liquid assets or has valuable personal property and at the same time anticipates bankruptcy, it is advisable to apply to the court independently, without waiting for creditors to do so.

The following features distinguishing the bankruptcy of entrepreneurs can be identified:

• If an entrepreneur has a debt as a citizen, it cannot be a basis for recognizing his insolvency as an individual entrepreneur. This means that when determining the signs of insolvency of an entrepreneur, such debt should not be taken into account. When assessing the real financial situation of an entrepreneur, the court will take into account only those debts that relate to commercial activities.
• Creditors, if their financial claims are not related to the activities of the entrepreneur and are related to the personality of the citizen, can participate in declaring the individual entrepreneur bankrupt. This position was expressed by the Supreme Arbitration Court of the Russian Federation in Resolution of the Plenum No. 51 in 2011.
• If the financial situation of an entrepreneur’s family is critical, he can independently apply to the court with a request to recognize his insolvency.
• The individual entrepreneur is responsible for debts with all of his property, with the exception of that which is not subject to collection and cannot be seized.
• An entrepreneur who manages a farm can submit an application only if all members of the farm agree.
• Creditors' claims must be monetary; they cannot be in kind. Monetary requirements can be called:
• Monetary obligations that an entrepreneur has in relation to creditors in civil transactions.
• Obligations to the budget and funds (taxes and fees). Fines and financial penalties are not taken into account.

Pay attention! If property in which the entrepreneur owns a share is sold at auction, the preemptive right to purchase such property, provided for in Art. 250 of the Civil Code of the Russian Federation, does not work. Co-owners can participate in auctions on a general basis.

Sometimes there comes a moment in the life of an individual entrepreneur when an understanding comes - that’s it, there is nowhere to move further, the business brings more expenses than income, debts accumulate and there is nothing left to do but declare oneself bankrupt. Of course, this is the most extreme measure and before deciding on it, you need to try to find other ways to solve problems, but if all other options have been exhausted, then you should know that the bankruptcy procedure in Russia has been worked out to the smallest detail and is subject to a certain algorithm of actions.

Nuances of bankruptcy of individual entrepreneurs

The bankruptcy law regulates this status for all forms of business at once: for individual entrepreneurs, for individuals who are not entrepreneurs, and for legal entities. In 2015, Federal Law No. 127-FZ “On Insolvency (Bankruptcy)” dated October 26, 2002 was supplemented with Chapter 10, dedicated to this procedure for individuals.

Let us consider the key features characteristic of the procedure for declaring bankruptcy of individual entrepreneurs, as opposed to individuals.

What is the difference between individual entrepreneur bankruptcy and individual bankruptcy?

Is there a difference in the bankruptcy of an individual entrepreneur and someone who is not an entrepreneur? It's minimal.

1. 1. If you do not close the individual entrepreneur before the start of the bankruptcy procedure, then over the next 5 years the individual will not be able to be an entrepreneur, he will not be registered again, but an ordinary person is free from this restriction, since he was not an entrepreneur before he became bankrupt.
2. 2. Individual entrepreneurs need to publish their intentions in the Unified Federal Register before writing an application to begin bankruptcy proceedings (15 days in advance); this is done through a notary. Non-individual entrepreneurs do not need to publish data; instead, notifications (copies of the application) are required to be sent to creditors.
3. 3. If bankruptcy occurred in the status of an individual entrepreneur (the individual entrepreneur was not closed), then another procedure for challenging transactions is possible - the so-called bankruptcy rules.
4. 4. The minimum amount of non-payment of obligations for individual entrepreneurs, which can cause bankruptcy status, is 500 thousand rubles, while for ordinary citizens, for this they need to owe more than 10 thousand rubles. Individual entrepreneurs with smaller debts are not declared bankrupt, and they will not be able to sell property at electronic auctions to pay off the debt.

NOTE! Not necessarily, but to significantly simplify the procedure, an entrepreneur with individual entrepreneur status is recommended to close it before submitting an application, especially since this can be done quickly and easily.

Claimants: who has the right to file for bankruptcy

The Arbitration Court deals with cases of declaring individual entrepreneurs bankrupt. There are two categories of possible plaintiffs who have the right to file for bankruptcy as a sole proprietor.

1. An individual entrepreneur himself can request to be declared bankrupt.
2. Creditors or persons and bodies specially authorized by them can also apply to the Arbitration Court with a claim to collect debts from an individual entrepreneur and declare him bankrupt. The only condition: their requirements must necessarily be related to the implementation of commercial activities by the individual entrepreneur.

Additionally, creditors who have financial claims against an individual entrepreneur as an individual can make financial claims against a potential bankrupt. An important nuance: they do not have the right to submit an application to the Arbitration Court against individual entrepreneurs, but their demands are taken into account during the bankruptcy procedure of individual entrepreneurs, as well as during the subsequent distribution of payments to lenders.

The right to bankruptcy: we provide evidence

The law of the Russian Federation takes into account that an individual entrepreneur can be declared bankrupt only if the debt arose precisely in the process of entrepreneurial activity. Any other debts, such as, for example, widespread consumer loans, rent payments, etc. regulated by courts of general jurisdiction. Before writing an application to be declared bankrupt, you will need to collect 100% evidence of the insolvency of the individual entrepreneur.

This evidence must comply with the list of reasons for bankruptcy of individual entrepreneurs, designated by the Federal Law “On Insolvency (Bankruptcy)” dated October 26, 2002 No. 127-FZ.

Strict regulation of these reasons is due to the need to avoid situations where temporary financial instability in business is used to declare bankruptcy of an individual entrepreneur. There are only two types of irrefutable evidence for the legal recognition of an individual entrepreneur as bankrupt:

1. Failure to pay mandatory payments, such as insurance, pension contributions, taxes, etc.
2. Inability to repay loan debts. In this case, we are talking about an amount of at least 10,000 rubles for three consecutive months. Moreover, the currency in which the loan was taken does not matter - the debt is converted from any monetary units into rubles according to the exchange rate at the time of filing the bankruptcy petition.

After receiving the application from the plaintiff, the Arbitration Court seizes the debtor’s property and prohibits any transactions with it. There are exceptions here: the law of the Russian Federation strictly defines the types of property that the court does not have the right to seize. Subsequently, these types of property cannot be included in the bankruptcy estate to be sold to pay off debts.

At the stage of filing an application to arbitration for bankruptcy of an individual entrepreneur, there is a high probability of stopping the process if creditors voluntarily and together with the individual entrepreneur draw up a debt repayment schedule with its subsequent implementation by the individual entrepreneur.

After all payments are made and debts are closed, the individual entrepreneur will be restored to the rank of a solvent citizen.

Observation procedure: why is it necessary?

After submitting an application with the provision of the necessary evidence, at the request of the plaintiff, a monitoring procedure or, as it is also called, a supervision procedure for a period of 4 to 6 months, is introduced over the activities of an individual entrepreneur.

Observation is necessary in order to assess the real financial situation of the individual entrepreneur, check documentation, analyze assets and liabilities, monitor the implementation of monetary transactions, compliance with the rights of employees and the legality of management actions.

All this will be handled by a bankruptcy trustee appointed by the court.

Bankruptcy proceedings

After the observation procedure has been completed and the bankruptcy trustee has recognized that the individual entrepreneur is not able to pay existing debts and loans, the stage of bankruptcy proceedings begins. Its meaning is that, within the framework of the bankruptcy law, within six months the debtor’s property is sold at public auction.

Previously, an announcement is published in the Kommersant newspaper about the beginning of the procedure for declaring a given individual entrepreneur bankrupt in order to find and notify all other possible creditors. Then, within a month from the date of publication of the article in the newspaper, potential creditors who have appeared again can put forward their demands against the “problem” individual entrepreneur.

After those wishing to present financial claims to a bankrupt entrepreneur, at a special meeting with the participation of all creditors, the procedure for selling the debtor’s property, the order of satisfaction of claims and the distribution of proceeds among lenders are decided.

Absolutely all property of a citizen-individual entrepreneur, including personal property, is subject to sale, except for:

• the housing unit or land plot where he currently resides;
• essentials, clothing, food;
• tools that can allow you to engage in any professional activity.

A bankrupt businessman cannot be left completely without funds, therefore, during bankruptcy proceedings, he is allocated a subsistence minimum.

The temporary manager seeks all other, in addition to the sale of property, opportunities and sources for repaying debts on the part of the bankrupt. The sale of the bankrupt's property is carried out by bailiffs, and all funds received from its sale, as well as those that were in the debtor's accounts at the time of bankruptcy, are deposited with the Arbitration Court.

If a third party is called to pay off the debts of an individual entrepreneur to creditors, for example, a credit institution, a large commercial structure or an investment fund, etc., the law does not prevent them from doing so. Upon completion of bankruptcy proceedings, all claims of creditors, even those that have not been fulfilled, are considered repaid.

It is true that after completion of the bankruptcy procedure, facts of illegal transfer of property to someone are revealed, as well as facts of deliberate concealment of property by the debtor. In this case, lenders whose claims were not satisfied during the bankruptcy procedure have the right to make new claims to recover funds from the bankrupt from the sale of newly discovered property.

Settlement agreement

At any stage of bankruptcy of an individual entrepreneur, the parties can agree on a settlement agreement. In this case, the individual entrepreneur will avoid forced liquidation and retain property and monetary assets. A settlement agreement must be registered in court and is a written agreement to repay the individual entrepreneur’s debts and loans within a strictly defined time frame. As practice shows, the court does not always grant the parties the right to a settlement agreement. For example, the reason for refusal is a repeated request to declare the individual entrepreneur bankrupt.

Bankrupt: what does it mean?

From the moment the debtor is declared bankrupt, he loses the status of an individual entrepreneur and for some time is deprived of the right to engage in legal commercial activities.

The bankruptcy procedure for individual entrepreneurs is a multi-stage, long and difficult process. It must be said that it does not always end in bankruptcy itself. Sometimes, after a thorough and detailed check, the bankruptcy trustee provides the court with a report on the normal activities of the individual entrepreneur. Therefore, before deciding to take such a step, it is necessary to carefully calculate all other ways out of the crisis situation and, if possible, try to avoid litigation.

The procedure for declaring an individual entrepreneur bankrupt differs from the procedure for legal entities. This is due to the fact that the individual entrepreneur is an individual. Unlike LLCs and other legal entities, individual entrepreneurs risk personal property.

An individual entrepreneur may be declared bankrupt if:

• the amount of his debt exceeds the value of the property owned by the person;
• the amount of claims unsatisfied by the entrepreneur exceeds 10 thousand rubles;
• the entrepreneur cannot fulfill his financial obligations for three months in a row.

The bankruptcy procedure for individual entrepreneurs has been significantly simplified, but this does not mean that the process is easy and fast.

Closing an individual entrepreneur: bankruptcy

You can close an individual entrepreneur quite simply by submitting a standard application to the tax authority. If business activity is not very successful, then it is necessary to initiate bankruptcy proceedings. In some cases, declaring oneself bankrupt is the only way out for an entrepreneur. This is relevant if the individual entrepreneur has debts to a banking organization that the business owner cannot pay due to lack of funds. Bankruptcy applications are accepted by the arbitration court. The initiator of the procedure can be either the business owner himself or his creditor.

Personal bankruptcy application

An application for bankruptcy of an individual entrepreneur is submitted to the arbitration court:

• by the entrepreneur himself;
• his creditor.

An entrepreneur has the opportunity to initiate the procedure himself, but not all business owners are ready to admit their insolvency. If a businessman is two weeks (14 days) late in paying his bills, his creditor can go to court himself. To do this, you need to fill out an application in the prescribed form. A sample application can be found freely available on the Internet.

How to file bankruptcy for an individual entrepreneur

To file bankruptcy for an individual entrepreneur, you must fill out an application and submit documents to the arbitration court at the place of residence of the entrepreneur. In this case, you must comply with a number of rules prescribed in Art. 27 and 33 of the Arbitration Procedure Code. These types of statements are subject to the same requirements as standard statements of claim. The content of the application largely depends on who exactly is submitting the document: the entrepreneur himself or the financial organization (creditor). If the application is completed incorrectly, it will be returned with all the documents that were attached. In this case, the application can be resubmitted later.

Features of individual entrepreneur bankruptcy

Bankruptcy of an individual entrepreneur is a simpler procedure compared to bankruptcy of legal entities. The process is simplified for the simple reason that the individual entrepreneur is an individual. An entrepreneur, when closing an individual entrepreneur, can submit an application to the arbitration court himself, drawing it up in accordance with the rules prescribed in the articles of the Arbitration Code of the Russian Federation. The court's decision becomes known within five days from the date of filing the application. If the document was drawn up incorrectly, it will have to be rewritten. The entrepreneur's creditor also has the right to initiate bankruptcy proceedings. In this case, the statement will look different.

Bankruptcy procedure for individual entrepreneurs

The bankruptcy procedure for an individual entrepreneur can be initiated by the entrepreneur himself or his creditor. The creditor should know that filing an application with the Arbitration Court is useless if the entrepreneur has already lost his status as an individual entrepreneur. In this case, the document will be returned to the plaintiff. If the entrepreneur has retained his status at the time of filing the application, then the documents are reviewed by the Arbitration Court within five days, after which a decision is made on the case. By law, the entrepreneur himself is obliged to file a bankruptcy petition with the court if he cannot pay bills and cannot cope with debts. When a business owner goes to court himself, he incurs fewer costs.

Consequences of individual entrepreneur bankruptcy

When the court decision is announced, the so-called bankruptcy proceedings begin. The consequences of bankruptcy for an entrepreneur can be different:

• an entrepreneur may lose the right to restore an individual entrepreneur for up to 12 months;
• the businessman’s license may be temporarily suspended;
• the court has the right to demand payment of penalties and other monetary payments;
• From the moment of bankruptcy, the accrual of interest on the debt amount ceases.

Often it is much more profitable for the creditor to settle with the businessman. An entrepreneur, on the verge of bankruptcy, usually simply does not have the funds to pay court costs. These costs will have to be covered by the lender.

Recognition of bankruptcy of individual entrepreneurs

Only the Arbitration Court can declare an individual entrepreneur bankrupt. To close an enterprise, a businessman must apply to the court with a corresponding application. A financial organization can also file a claim against an individual entrepreneur. In some situations, it is wiser to go for a settlement; this is beneficial to the creditors themselves. If the process continues, the lender risks losing his savings. To declare an individual entrepreneur bankrupt, the court needs five days.

How much does bankruptcy cost?

The cost of individual entrepreneur bankruptcy depends on the goals pursued by the initiator of the procedure. Prices range from 15 thousand to 1 million rubles. When setting prices for services, companies focus on the amount of work to be done. It is more profitable for an entrepreneur to initiate bankruptcy proceedings first, because in this situation he will be able to independently choose an arbitration manager. The cost of services can be calculated by multiplying monthly expenses by the number of months during which the business will be conducted. To this amount you must also add current bankruptcy expenses.

Stages of individual entrepreneur bankruptcy

The first stage in the bankruptcy of an individual entrepreneur is observation. During this period, the IP papers are analyzed by a competent specialist. It also determines the financial condition of the entrepreneur. When the procedure is completed, the results of the observation are submitted to the court. The court may make a decision on reorganization or bankruptcy proceedings. The reorganization procedure involves additional cash injections from creditors. It is carried out exclusively with the consent of capital holders. If it was decided to conduct bankruptcy proceedings, then the entrepreneur’s property is confiscated and sold. True, the list of values ​​for implementation is limited.

Grounds for declaring an individual entrepreneur bankrupt

The grounds for declaring an individual entrepreneur bankrupt are regulated and specified in the Federal Law on Bankruptcy. In fact, an individual entrepreneur can consider himself bankrupt; the same assessment is rightly given by his creditors, if the individual cannot make the obligations assumed under the loan agreement regarding the timely payment of payments. There is a fact of delay, any payments are missing. Additionally, the individual entrepreneur does not have the funds to repay the main debts to the state (taxes, mandatory contributions).

In court, the issue of assigning bankrupt status to an individual entrepreneur is resolved on the basis of an application submitted from the main creditor or directly from the debtor in the prescribed form. The request is accompanied by the provision of supporting documents, reports, certificates, and other documents required by the court. Based on factors that aggravate the borrower’s situation (the inability to conduct business after the sale of his property to cover the debt to creditors, insufficient proceeds to pay debts, the inability to make mandatory payments after repayment), decisions are made on bankruptcy of the individual entrepreneur.

Who can initiate bankruptcy of an individual entrepreneur

The Bankruptcy Law defines the grounds for declaring an entrepreneur bankrupt and describes who can initiate bankruptcy of an individual entrepreneur. The initiators are always interested parties, who in the bankruptcy case of an individual entrepreneur are one or more banks or other creditors who have not received due payments with the interest specified in the agreement for more than three months. An economic entity itself can also file an application for declaring itself bankrupt if it sees no other possibility of debt restructuring.

Participants may also include representatives of local or state authorities. It should be understood that during the process the rights and demands of all parties: the debtor, creditors and the state must be satisfied to the maximum extent possible.

Documents required to initiate a case

The documents required to initiate a bankruptcy case for an individual entrepreneur contain a long list, which is based on a corresponding application with a request to declare a person bankrupt from an individual entrepreneur or other parties designated in the law as having such a right.

List: documents confirming the registration and activities of individual entrepreneurs, a list of creditor companies and individuals with attached agreements or debt receipts including repayment schedules, copies of certificates of ownership of real estate, certificates of all types of financial income, marital status, presence of children, etc. existing obligations, list and inventory of property. In particular, any additional statements proving the debtor’s inability to provide for the accumulated amount of debt will help in the outcome of the case.

Debt repayment plan

A debt repayment plan may be attached to the list of documents provided for the trial, which are the basis for declaring an individual entrepreneur bankrupt. The presence of such a document indicates a search for rational ways to resolve the issue of debt restructuring amicably. The plan is a tabular or graphical material for the uniform repayment of debt to credit institutions, drawn up on the basis of the current financial capabilities of the debtor. It must contain a column about the remaining funds for the debtor’s life and the maintenance of his family. If the court approves this option for repaying the debt, the case will be postponed for 3 months.

In the absence of a debt repayment plan, the court may propose its own debt restructuring schedule based on available income. If there is no possibility of paying off debts, the individual entrepreneur is declared bankrupt. In this case, the debts will be listed in order of importance and in the shares specified in the decision of the arbitration court.

Russian bankruptcy legislation

Russian bankruptcy legislation is represented by the main legislative act - Federal Law No. 127 “On Insolvency (Bankruptcy)”. The law does not provide for confirmation of the bankruptcy status of individuals and companies, but for the implementation of various measures to bring entities out of a crisis, restore solvency, and find ways to help pay off accumulated debts.

In a number of cases, when the debtor’s insolvency is confirmed and there is no other way, such as writing off the debt and selling the property, the Arbitration Court still declares the person bankrupt. The law must ensure that the interests of all parties to the process are fulfilled equally. A borrower at the stage of clarifying bankruptcy or already declared bankrupt is not left without housing; the payments withdrawn from him are funds that remain for the use of him and his family after subtracting living expenses. Creditors have the opportunity to repay debts through a debt restructuring procedure; if this is not possible, they can use funds received from the sale of the debtor’s property at auction.

Property of individual entrepreneurs during bankruptcy proceedings

During the bankruptcy procedure, the property of an individual entrepreneur is the property of the debtor, but is subject to an inventory and cannot be transferred to the disposal of third parties. When a decision is made on the borrower’s insolvency to pay debts under loan obligations, the bailiff service seizes real estate, vehicles, and any other property of the responsible person.

The list of objects and things excluded from collection includes the housing of an individual entrepreneur who has become bankrupt. One unit of real estate (house, apartment, other object) remains with the owner if this is the only place suitable for living. The land on which the house is located is also a non-confiscatable plot. Personal belongings of an individual (except for jewelry, valuable objects of art), as well as property intended for professional activities (except for expensive ones, costing from 100 minimum wages) are not confiscated. Food and money in an amount less than the subsistence level remain untouchable. The entire list is listed in Article 446 of the Code of Civil Procedure of the Russian Federation, paragraph 1.

The role of the arbitration manager

An arbitration manager is an inspecting, controlling person necessary in a bankruptcy case, selected from a list of candidates by the applicant for declaring the debtor bankrupt. Thus, the arbitration lawyer represents the interests of the applicant party.

In cases where an individual entrepreneur independently files a petition for recognition of bankruptcy status, the role of the arbitration manager is to carefully study the financial situation of the applicant, finding ways to restore creditworthiness and financial recovery. Otherwise, the manager creates a bankruptcy strategy to minimize losses. The arbitration manager accepted by the creditor must maximize the credit institution's gain in the transaction.

Completion of bankruptcy proceedings

The bankruptcy procedure can be completed without a decision on bankruptcy of the debtor. In some cases, the case is postponed for a certain period, checking the ability of the individual entrepreneur to make payments approved and restructured in court. Sometimes a manager can find a way to financially improve the activities of a business entity, then the bankruptcy case is terminated or postponed.

Completion of the bankruptcy procedure for an individual entrepreneur is the same for all cases of declaring a person bankrupt. The debtor's property is seized and sold at auction. Debts are distributed among creditors. Uncovered debts are subject to write-off and cannot be claimed after a court decision.

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Regulation of bankruptcy of a citizen

The arbitration court has the right, upon a reasoned petition of a citizen and other persons participating in a bankruptcy case, to exclude from the bankruptcy estate the citizen’s property, which, in accordance with civil procedural legislation, may be foreclosed on, which is illiquid or the income from the sale of which will not significantly affect the satisfaction creditors' claims. The total value of a citizen’s property, which is excluded from the bankruptcy estate in accordance with the provisions of this paragraph, cannot exceed 100 minimum wages established by federal law.

The list of a citizen’s property, which is excluded from the bankruptcy estate in accordance with the provisions of this paragraph, is approved by the arbitration court, about which a ruling is made that can be appealed.

Simultaneously with issuing a ruling on the introduction of surveillance against a citizen, the arbitration court imposes an order on the citizen’s property, with the exception of property that, in accordance with the law, cannot be foreclosed on.

The temporary manager, before the arbitration court considers the bankruptcy case, ensures that the debtor’s property is assessed.

At the request of a citizen, the arbitration court may release the citizen’s property (part of the property) from arrest if a guarantee or other security for the fulfillment of the citizen’s obligations is provided by third parties.

Based on a citizen’s application, the arbitration court may postpone the consideration of a bankruptcy case for no more than a month for the citizen to make settlements with creditors or reach a settlement agreement.

If there is information about the opening of an inheritance in favor of a citizen, the arbitration court has the right to suspend bankruptcy proceedings until the issue of the fate of the inheritance is resolved in the manner prescribed by federal law.

If, within the period established by this article, the citizen has not provided evidence of satisfaction of the creditors' claims and a settlement agreement has not been concluded within the specified period, the arbitration court makes a decision to declare the citizen bankrupt and to open bankruptcy proceedings.

Consequences of declaring a citizen bankrupt:

• the deadlines for fulfilling the citizen’s obligations are considered to have occurred;
• the accrual of penalties (fines, penalties), interest and other financial sanctions on all obligations of a citizen ceases;
• collection from a citizen for all enforcement documents is terminated, with the exception of enforcement documents for claims for compensation for harm caused to life or health, as well as for claims for the collection of alimony.

The arbitration court sends the decision to declare a citizen bankrupt and to open bankruptcy proceedings to all known creditors, indicating the deadline for the creditors to submit claims, which cannot exceed 2 months.

Execution of an arbitration court decision

The decision of the arbitration court to declare a citizen bankrupt and to open bankruptcy proceedings and the writ of execution to foreclose on the citizen’s property are sent to the bailiff to carry out the sale of the debtor’s property.

If it is necessary to permanently manage a citizen’s real estate or valuable movable property, the arbitration court approves a bankruptcy trustee for these purposes and determines the amount of his remuneration. In this case, the sale of the citizen’s property is carried out by the bankruptcy trustee.

The proceeds from the sale of the citizen's property, as well as the funds available, are deposited with the arbitration court that made the decision to declare the citizen bankrupt.

The arbitration court considers the claims of creditors submitted by creditors or the debtor. Based on the results of consideration of these claims, the arbitration court makes a determination on the procedure and amount of satisfaction of the creditors' claims.

Until the creditors' claims are satisfied, the funds deposited with the arbitration court cover the costs associated with the consideration of the bankruptcy case and the execution of the arbitration court's decision to declare a citizen bankrupt and to open bankruptcy proceedings.

Creditors' claims are satisfied in the following order::

1. claims of citizens to whom the citizen is responsible for causing harm to life or health, by capitalizing the corresponding time payments, as well as demands for the collection of alimony;
2. calculations are made for the payment of severance pay and wages of persons working under an employment contract, and for the payment of remuneration to the authors of the results of intellectual activity;
3. settlements are made with other creditors.

Settlements with creditors are made in the manner prescribed by Articles 135 - 138 of the Federal Law.

The claims of creditors of each priority are satisfied after full satisfaction of the claims of the creditors of the previous priority, with the exception of cases established by this Federal Law for satisfying the claims of creditors secured by the debtor's property.

If there are insufficient funds in the deposit of the arbitration court, they are distributed among the creditors of the corresponding priority in proportion to the amounts of their claims.

After completing settlements with creditors, a citizen declared bankrupt is released from further execution of creditors’ claims declared during the procedures applied in a bankruptcy case, with the exception of creditors’ claims for compensation for harm caused to life or health, for the collection of alimony, as well as other demands, inextricably linked with the identity of the creditor and not repaid in execution of the decision of the arbitration court declaring a citizen bankrupt, or partially repaid, or not declared during the procedures applied in the bankruptcy case, which remain in force and can be presented after the end of the bankruptcy proceedings citizen in full or in their outstanding part.

If facts of concealment by a citizen of property or illegal transfer of property by a citizen to third parties are revealed, a creditor whose demands were not satisfied during the procedures applied in a bankruptcy case has the right to make a claim to foreclose on this property.

Consequences of repeated bankruptcy of a citizen

Within 5 years after a citizen is declared bankrupt, bankruptcy proceedings cannot be initiated again at his request.

If a citizen is repeatedly declared bankrupt at the request of a creditor, at the request of the authorized body for claims for payment of mandatory payments within 5 years after completion of settlements with creditors, such citizen is not exempt from further fulfillment of the creditors’ claims.

Unsatisfied claims of creditors may be presented in the manner prescribed by civil law.