Bankruptcy of a sole proprietor (individual - entrepreneur)

Bankruptcy of a sole proprietor (individual - entrepreneur)

The bankruptcy procedure for individuals and sole proprietors in Ukraine is identical. With the adoption of the Bankruptcy Code, which began to operate in October 2019, the algorithm for recognizing entrepreneurs as financially insolvent was simplified and expanded to all categories of citizens with the only difference that in the case of opening a case on declaring an individual entrepreneur bankrupt, the corresponding entry is entered in the USR.

In judicial practice, proceedings related to the inability of individuals to pay off debts appear as insolvency cases. It is rather difficult for an ordinary person or an entrepreneur to be recognized as a bankrupt, especially since the corresponding Code is a fairly new regulatory legal act. To understand the issues of minimizing or eliminating debt will help lawyers in corporate law of the company "RegService". We work with clients from all over Ukraine, we organize personal meetings in the office in Kiev.

What does the bankruptcy procedure for individuals give?

There are two possible scenarios for the debtor:

• debt restructuring;
• recognition of insolvency in the payment of debt.

The second option applies only if it is impossible to restructure the debt.

Pros and cons of bankruptcy of an individual, entrepreneur

The main advantage of the event is the opportunity to live in peace, knowing that the debt that has not been repaid due to insufficient property must be written off. Besides:

• from the time of the opening of production, fines and penalties cease to be charged;
• arrest and other restrictions on property are imposed only within the framework of the case under consideration;
• tax debt that has arisen within three years from the date the business was opened is recognized as hopeless and is subject to write-off;
• while the case is pending trial, creditors and collectors have no right to disturb the debtor.

On the other hand, the court can prohibit travel abroad, oblige to disclose information about income and property. During the period of debt restructuring, it is prohibited to take out new loans or act as a surety. For 3 years, a person is not considered to have an impeccable business reputation, for 5 years he is obliged to notify about his status when resolving financial issues.

In what cases is the bankruptcy of a sole proprietorship (FOP), individual recognized

An insolvency petition may be filed with the economic court exclusively by the debtor himself if:

• the amount owed is at least 30 minimum wages;
• payments are not paid more than 50% over a two month period;
• the court adopted a conclusion on the absence of property to repay the loan;
• there was a threat of insolvency (illness, disability, job loss).

Alimony, payments related to death, harm to health of another person are not subject to write-off, restructuring.

How to make the bankruptcy of physical persons

The bankruptcy procedure for an entrepreneur, a citizen who does not carry out economic activities, includes several stages:

1. Applying to the economic court with a statement and a package of documents (passport, description of assets, list of creditors, copy of work record book, certificate of absence or presence of a criminal record, and others). Before submitting documents to the court, you should seek the help of lawyers and order a service to support the procedure.
2. Consideration of creditors' claims in court.
3. Development of a restructuring plan (120 days).

If the restructuring plan is not fulfilled, the individual is declared bankrupt.

To order bankruptcy services for individuals, consult a specialist, contact the manager of RegService by phone or order a call back.

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