On April 12, the President signed the Insolvency Bill into Law. The Law regulates the procedure for paying debts and bankruptcy of debtors - legal entities and individuals, including self-employed and does not apply to state institutions.

While the Chapter 14 "Insolvency of an Individual" shall take effect on January 1, 2023.

For the first time, the law introduces insolvency regulation for debtors - individuals who are unable to make payments to creditors or fulfill their duties on taxes and fees, if the debt is not repaid within three months and is at least 200 times the size of the BRF.

To pay off their debts, they may be given an installment plan of up to three years or the sale of property with release from overdue debts.

In the law, insolvency is divided into temporary and permanent:

• debtor shall be deemed temporarily insolvent should he/she fail to perform obligations within 3 months (for self-employed - 6 months);
• for permanent insolvency, the debtor's obligations must exceed the value of his assets on the day the application was submitted to the court, as well as in the reporting period at the beginning of the current year (previous year, if the application was filed in January-March).

Debtor’s insolvency shall be considered by court based on an application at the place of registration of debtor/legal entity, as well as at the place of residence of individual/self-employed. Debtor and his creditor can apply to the court to initiate insolvency proceedings.

The court is given 2 months from the date of receipt of application for proceedings to consider the case on recognition of insolvency. In special cases, the timeline can be extended by another month.

The applicant must transfer to the court’s deposit account 7 minimum wages as a remuneration to the court administrator.

Prior to the initiation of a case, pre-trial sanitation may be carried out. An insolvent legal entity is required to notify the founders and creditors in order to start its process.

For the period of pre-trial rehabilitation, the legal entity shall be given a payment deferral of taxes and fees, repayment of loans. For recovery, one can re-profile production, buy out overdue debts, or attract financial assistance.

In some cases, the debtor may be provided for reorganization state support for 12-24 months. However, in case of inefficiency, it can be curtailed.