«Insolvent surge: bankruptcies volume has sharply increased in St. Petersburg»
Alexandra Ulezko, Head of Bankruptcy Group at Kachkin & Partners, comments on the situation with the increased number of bankruptcies in St. Petersburg.
Corporate bankruptcies have hit pre-covid numbers, and personal failures are picking up the pace.
Fedresurs calculated that in Russia, within the first half of the year, almost 5 thousand companies were declared insolven,. At the same time, the number of corporate bankruptcies during this period increased by 9.2% compared to the same period last year and reached pre-covid indicators. However, when compared with the same period in 2019, the number of legal entities declared insolvent fell by 19.2% according to Fedresurs.
According to Ilya Torosov, Deputy Minister of Economic Development of the Russian Federation, the current situation may be associated, among other things, with business support measures taken during the coronavirus spread (for example, moratorium on the creditors filing bankruptcy applications). “This has helped many enterprises to overcome the coronavirus restrictions, which were able to stabilize their economic activities in a crisis situation,” the official said.
But Alexandra Ulezko, Head of Bankruptcy Group at Kachkin & Partners believes that the support measures were ineffective. “Personally, I do not know a single case where the court would grant the debtor a judicial installment plan, moreover that applications for granting an installment plan were received by the courts for consideration at all” she emphasizes. — The moratorium norms were applied in practice, but formally. The courts have taken a position: if the corresponding type of activity is not in the OKVED, then the moratorium rules are not applied to such a debtor.»
Moscow has become one of the leaders in the number of corporate bankruptcies: 969 companies were declared insolvent within six months. Petersburg occupies the second line in this top, 401 companies went bankrupt. The growth in the northern capital, according to Fedresurs, amounted to 36.9% over the same period in 2020.
Situative and random
In this situation, Karina Sidorova, head of the anti-crisis management and bankruptcy practice of the legal company Duvernoix Legal, does not see anything extraordinary. “There is some growth due to the fact that the postponement provided by the state is over,” she says. — The owners of the premises began to collect the rent arrears. The tenants have not accumulated enough funds to pay off. There is some delayed effect, but no more.»
According to Alexandra Ulezko, the greater increase in corporate bankruptcies in St. Petersburg compared to Moscow is situational and random. “At some point, everything will change. According to my observations, there are many retailers among the bankrupt companies. This is because bankruptcies continue, which arose even before the pandemic. For example, we are talking about TD “Intertorg”, structures of “Yulmart”, — the expert clarifies.
Еxpecting a new law
All experts interviewed by DP agree that the expected reform of bankruptcy legislation also influences the current situation. “The changes can be dramatic. For example, now the applicant-creditor proposes a candidate for the arbitration manager, and in the new law version, his candidacy can be determined by means of a random sample. Therefore, it is possible that many creditors now want to use the “old” algorithms for supporting bankruptcy cases and launch procedures before the changes come into force,” explains Alexander Solovyov, Yukov and Partners Bar Association lawyer.
The new bill also provides for tougher sanctions, including criminal ones, for misconduct in bankruptcy and deliberate bankruptcy. “Debtors and beneficiaries, when assessing the risks of entering the procedure, will take into account these factors. Many will look for alternative ways out of the situation,” predicts Karina Sidorova.
In the first half of the year, the growth of bankruptcies of individuals accelerated: in Russia, 88 thousand people were declared insolvent, which is 2.1 times more than in the same period last year, Fedresurs notes. Moscow is on the first place in this anti-rating: 4, 858 thousand people went bankrupt, and the increase was 98%. In St. Petersburg, only 3.8 thousand citizens were declared insolvent in the first half of the year, but the growth rate is higher than in the capital — 106.8%.
First, such indicators were influenced by the pandemic: rising prices, job loss, stagnation of different industries, illness, which worsened people’s financial situation. Another factor is the availability of online microloans, which are literally imposed by advertising on social networks.
“The attitude towards bankruptcy is also changing: earlier it seemed to people as something terrible and risky. Now this is a common solution to the debt issue. Those who are pulling the credit strap out of their last strength have familiar bankrupts who have started a new life without loans from a clean slate, «says Yulia Kombarova, general director of Legal Bureau No. 1.
In the future, the situation with personal bankruptcies may be affected by a new opportunity that the Ministry of Economic Development and Trade is working on. Now for citizens with a small debt, an out-of-court bankruptcy procedure is provided through a system of multifunctional centers. However, as practice has shown, it turned out to be not that much demanded: this year 45 cases were initiated in St. Petersburg, 20 were completed. The Ministry of Economic Development proposes to allow citizens to file an application for insolvency through the «State Services».
“Such a reform will make it easier to apply for simplified bankruptcy, reduce the number of intermediaries that are generally not necessary. Moreover, the task of the state today is to make the maximum number of services available online. Only now people are learning how simplified bankruptcy works, so we expect significant growth when debtors “taste” this opportunity,” predicts Yulia Kombarova.
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