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The results of the nine-month survey for 2024 show that the number of bankruptcy procedures for individuals and companies has increased significantly (more than 20%). However, the results for the third quarter show a significant slowdown. The increase in the number of corporations declared bankrupt and the number of individuals declared bankrupt out of court was less than 4%. Lawyers talk about "reaching a peak". According to experts, further trends will depend on several factors, including general economic conditions, the size of central bank base rates, sanctions pressure, possible restrictions on advertising consumer insolvency and the willingness of creditors to bear increased costs. procedure.
The Unified Federal Register of Bankruptcy Information (UFRBI or "Fedresurs") has published figures on bankruptcies in Russia for the third quarter of 2024. The out-of-court procedure, which allows citizens to become bankrupt by filing an application at the MFC with a debt of 25,000 to 1 million rubles, continues to be popular. The number of out-of-court bankruptcies initiated from January to September amounted to 38,389, which is 4.8 times more than for the same period last year. In November 2023, access to this procedure for recipients of pensions and benefits was simplified, as a result of which pensioners make up approximately 50% of all citizens who received "out-of-court assistance" in 2024.
In total, since its launch in September 2020, 41,749 people have gone through this mechanism, and more than 17 billion rubles have been written off.
"The percentage of applications submitted by citizens being returned has noticeably decreased" (below 9), said First Deputy Minister of Economic Development Ilya Torosov, citing "demand for procedures" and "increasing levels of financial literacy among the population." %). In addition, starting August 1, data will be exchanged using an interdepartmental electronic interaction system in order to "free the public from the obligation to provide information that can be provided by government agencies and organizations" and "make the review process more accessible and convenient." "We have started," he said. - Mr. Torosov emphasized.
Anton Krasnikov, a partner at Sotheby's law firm, believes that "out-of-court bankruptcy suits will continue in the near future" because the procedure has already "passed its trial period" and minor debts are also the focus of attention. Write off orders that were previously unavailable and legal. At the same time, Elena Yakusheva, a partner at Pleshakov, Ushkalov and Partners, believes that the sharp increase in "out-of-court proceedings" is "a temporary phenomenon associated with the expansion of the circle of people." procedures and "too extensive and intrusive advertising."
David Kononov, head of the bankruptcy practice at the law firm Lemchik, Krupskiy and Partners, believes that amendments to the advertising law, which the State Duma is currently considering, could reduce the growth rate of consumer bankruptcies.
The bill proposes to limit the use of aggressive marketing language, limit promises to “pay off the debt,” and spell out the negative consequences of this process (for example, difficulties in obtaining a loan, a ban on holding management positions, etc.). Mr. Kononov explains: “Out-of-court bankruptcy may be less attractive to some citizens, especially when attention is focused on potential risks,” he explains. However, the lawyer does not expect a significant reduction here, “since the process still concerns socially vulnerable categories and gives them a real opportunity to solve their debt problems.”
Only the data for the third quarter indicate a slowdown. The growth of "extra-judicial bankruptcy" from July to September 2024 was only 3.4% compared to the same period last year, while the number of bankruptcy cases increased by 25.4% (109,100 people versus 87,000 people) over the same period. However, judicial insolvency is also reaching a plateau and no significant fluctuations are expected, says David Kononov. The number of judicial bankruptcies in the future will be influenced by "the cumulative effect of the overall debt burden of the population, since retail loans, credit cards and loans from microfinance organizations are breaking new records this year," says Vladimir Bublikov, managing partner of the Bublikov & Partners law firm.
In the area of corporate bankruptcy, the number of insolvent corporations from January to September was 6,392, which is 26.1% more than in the same period last year. However, the growth rate was barely 3.8% in the third quarter and increased by 53% and 30% in the first and second quarters, respectively. A significant share of initiators belongs to the Federal Tax Service (25.5% of cases, in 2023 - 13.4%), 66% (other creditors). Only 8.1% of cases are cases where the corporation itself initiates bankruptcy, and 0.2% of cases are bankruptcy of company employees.
According to Elena Yakusheva, the slowdown in the growth of the number of bankrupt companies is due to the fading surge after the moratorium. "After the 2022 moratorium, all creditors actively filed for bankruptcy of the debtor, but now everything has stabilized," said Vadim Borodkin, an adviser to the law firm "Sad". "Companies that were unable to cope with the negative factors that arose previously resorted to bankruptcy procedures, and now the economy has stabilized." "This has affected the reduction in corporate bankruptcies." Pavel Markin, a senior lawyer at BGMP AB, attributes the slowdown in the growth rate of legal entity insolvency to "the adaptation of business entities to changing circumstances."
The head of Federresurs, Alexey Yukhnin, noted that the number of observations (pre-bankruptcy proceedings) in the third quarter decreased significantly - by 33% compared to the same period in 2023.
In his opinion, this "may indicate that creditors and debtors are increasingly seeking compromises and options for debt restructuring without resorting to litigation." Evgeny Kryukov, managing partner of the Portfel Law Firm, believes that creditors are beginning to "better assess the likelihood of long-term bankruptcy and be more loyal to debtors in cases where there is a real possibility of restructuring."
Lawyers cite the changes to the law, which came into force on May 29, as one of the factors that will influence future trends in corporate bankruptcies. They have increased from 300,000 to 2 million rubles. This is the minimum amount of debt that can lead to corporate bankruptcy. Mr. Borodkin notes that “if the initial insolvency proceedings were often used to encourage debtors to fulfill small obligations without initiating enforcement proceedings, then for many creditors this option has diminished, since the minimum debts have increased.” At the same time, the number of bankruptcy applications from various creditors is expected to increase, and together they will be able to overcome the increased minimum threshold, Mr. Bublikov said.
Vadim Borodkin stated that these amendments could already reduce the number of bankruptcy applications filed by companies.
Since it takes an average of 7 months from a court hearing to a company being declared insolvent, the effects of the debt limit increase will likely be reflected in bankruptcy statistics in 2025.
In addition, the increase in costs (increasing the cost of the proceedings and the state fee for filing a lawsuit) will "reduce the number of bankruptcies initiated by hopeless debtors," Mr. Borodkin believes. Evgeny Kryukov adds that this will scare off some creditors. "Where creditors previously relied on the costs of arbitration managers and consultants, now the mathematics of the process is completely different and the cost of supporting large-scale insolvency will increase many times over."
Markin notes that there is no point in creditors declaring small debtors bankrupt now. However, "bankruptcy of large corporate debtors will begin in any case. Increasing state tariffs and raising the debt threshold will not save them," Anton Krasnikov is sure. At the same time, Pavel Markin admits that increasing the size of the state fee could reduce the number of bankruptcy applications filed "for the purpose of putting pressure on debtors."
The creditor's decision is also influenced by other factors, such as the pressure of sanctions on the debtor, the latter's participation in government contracts, and the presence of tax debt, said Evgeny Kryukov. But in any case, bankruptcy will not lose its relevance, assures Anton Soloshchenko, Managing Partner of AlfaPro. "This is due to the fact that as base interest rates grow, it becomes increasingly difficult for enterprises to fulfill their financial obligations."