Insolvency (Bankruptcy) Procedure: Quo Vadis?

Abstract

The paper examines the conceptual role of the insolvency (bankruptcy) procedure and the emerging trend towards the dominance of this legal mechanism over other (basic) legal categories. Three key categories are given as examples: the institute of non-interference in private affairs, which in the opposite case is transformed into intervention; the institute of limited liability of the founder (participant) and their legal entity, which presupposes a clear separation of the property masses of these subjects; and the institute of limitation period. It is proved that the bankruptcy procedure modifies the perception of the mentioned categories. Intervention becomes acceptable, which finds expression, for example, in the admissibility of challenging transactions and analyzing the debtor’s economic activities. The boundaries of the assets of a legal entity and an individual are blurred out in the context of the institution of subsidiary liability in bankruptcy. Only the statute of limitations, due to current court practice, is still subject to fewer changes, which are nevertheless present.The author concludes that it is unacceptable to consider the institution of bankruptcy as an instrument of unlimited suppression of other legal structures in favor of the interests of the creditor community. An attempt has been made to demonstrate that the legal essence of the institution of insolvency is much broader than is commonly believed. This, in turn, explains the inadmissibility and danger of perceiving bankruptcy proceedings as a kind of «sacred» legal phenomenon.