General procedure for liquidation of legal entities
The general procedure for liquidating legal entities provides for a certain algorithm of actions.
- First, a decision is made to liquidate the owner (participants, shareholders) of the legal entity.
- A liquidation balance sheet is drawn up and the possibility of settlements with all creditors is established.
- If it is possible to settle with all creditors and there are no open enforcement proceedings, then the legal entity being liquidated settles with creditors, sells its property, undergoes inspections by tax authorities and, in the absence of debts, registers the termination of activities in the State Register of Legal Entities and Individual Entrepreneurs and Public Organizations.
Usually, problems arise at the stage of inspections: the inspection is carried out when the legal entity no longer has assets and has drawn up a liquidation balance. But as a result of the inspection, taxes and fines may be added. And the ability to pay these taxes and fines is no longer there, and therefore the legal entity becomes unable to pay its creditors - and we move on to the next point. - If the legal entity in liquidation cannot settle with all creditors, then it`s obliged to submit an application for insolvency – bankruptcy to the court within 30 days from the moment the manager becomes aware of such impossibility. In this case, the amount of debt is irrelevant.
In the bankruptcy procedure, the legal entity being liquidated becomes a debtor with all the advantages and difficulties described on the page Bankruptcy of Legal Entities - Protection of the Debtor's Interests.
According to the results of the bankruptcy case, the debts of the legal entity being liquidated are written off and an entry on the termination of economic activity is made in the State Register of Legal Entities and Individual Entrepreneurs.
The consideration of an insolvency case in a commercial court does not require a mandatory audit by tax or other authorities to complete the bankruptcy procedure.
The harsh truth is that hopes for inaction by creditors or tax authorities usually do not come true and bankruptcy case is initiated by the creditor. And the initiation of proceedings at the request of the creditor is already sufficient basis for joint and several liability of the debtor's manager, in accordance with Part 6 of Article 34 of the Code of Bankruptcy Procedures of Ukraine.
The sooner a client starts taking measures to protect themselves, the greater the chances of success.