Insolvency or so-called bankruptcyis the inability of the debtor to pay off its debts to the borrower within the prescribed period, as well as the lack of ability to satisfy the requirements of the budget and off-budget funds.

According to the Federal Law on bankruptcy, declareInsolvency can only be an arbitration court on the basis of an application by the creditors or the borrower himself. Bankruptcy can only be a legal entity or any organization engaged in commercial activities, except for state-owned enterprises, a pension or charity fund.

Federal Law (FZ) on bankruptcy of legal entitiespersons assumes liquidation of the enterprise only after attempt to restore solvency of the legal person by carrying out of preventive actions. The purpose of these procedures, first of all, is the calculation with all creditors and the budget, and secondly - a full restoration of solvency.

Actions to prevent bankruptcy havemeaning only if the debtor company agrees and can be initiated by creditors, government agencies, etc. According to the Federal Law on Bankruptcy, the basis for filing an application with an arbitration court is:

- the presence of overdue debts with a period of not less than three months;

- the inability of the organization to pay its debts in the near future.

The debtor is obliged to notify all his creditors ofconducting preventive measures. If all the requirements are met, the judge, within five days of filing, reviews the application and makes a final decision.

First to help the company recoverits solvency, the arbitration court introduces the manager, who performs the supervisory and control functions. A month later, the manager provides a report on the work done.

If necessary, legislationaccording to modern trends and norms. Thus, for example, amendments to the Federal Law on insolvency (bankruptcy) introduced amendments to the list of measures aimed at meeting creditor claims.

The maximum period for hearing a bankruptcy case is notmust exceed seven months. Based on the conducted studies, a decision is made to declare the debtor bankrupt. A measure may be introduced, such as bankruptcy proceedings, financial recovery or external management. Moreover, at each stage an amicable agreement can be concluded by mutual agreement of the parties with full settlement of all obligations with creditors.

The main task of the arbitration court is notthe announcement of the liquidation of a legal entity, and in accordance with the Federal Law on bankruptcy, the provision of assistance to an enterprise that finds itself in a difficult situation. Elimination is carried out only after all the above-mentioned measures have not yielded the proper result. Then the activities of the manager will be directed at satisfying the demands of creditors and state bodies. The consideration of the case may be postponed on the basis of the debtor's petition, if in the near future it plans to pay off all its debts.

As a rule, the introduction of external control giveshope for a significant effect. In a month, the external manager must provide a report on the work done and information on the prospects for further activities. After full satisfaction of the claims of creditors and the budget, the perspective of the legal entity, that is, the expediency of its existence, is assessed. The arbitration judge makes a verdict: either states the impossibility of further activity, or fixes the positive trend of temporary management and allows the legal entity to continue its activity with new forces.

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