Business bankruptcy: St. Petersburg ranks second in the country

The region ranked second in the country in terms of the number of bankruptcies in the business segment - the second one was Moscow, where 553 organizations went bankrupt. Such data is provided by the Fedresurs website. On the third line of the rating there is the Moscow region, where 214 enterprises were declared bankrupt in the first quarter of this year.

In terms of bankruptcies of individuals, St. Petersburg took only the sixth place in Russia - 2,101 people in three months.

On the first three lines there are the Krasnodar Territory, the Moscow Region and Moscow (2657, 2571 and 2501 bankruptcy, respectively).

St. Petersburg is traditionally distinguished by high business activity, so the second place in business bankruptcy looks quite natural, comments Elena Kozina, the managing partner of the “ELKO profi” law office. Since the end of February, an increase in the number of bankruptcies was expected: the withdrawal of a number of foreign companies from the Russian market, the cessation of foreign investment in Russian assets worsened the economic situation.

One of the measures to stabilize the economic situation was the adoption of a moratorium on initiating bankruptcy cases for the period from April 1 to October 1, 2022 by the Government of the Russian Federation. The purpose of the moratorium is to provide debtors with the opportunity to cope with current difficulties, improve their business, find new sources of income and strengthen assets without closing companies or businesses and without laying off the employees.

A similar measure was taken during the coronavirus pandemic in 2020. From April 6 to October 6, 2020 (subsequently, the period was extended by 3 months), creditors could not initiate the bankruptcy of a number of companies from the affected sectors of the economy. Unlike the 2020 moratorium, in 2022, the ban on initiating bankruptcies affected all legal entities and individuals, with the exception of developers from construction industry.

In 2020, the introduced moratorium caused a lot of negative assessments in legal circles.

The measure was supposed to have only a temporary effect, depriving creditors of legitimate ways to pressure debtors to collect debts and freezing the flow of capital from virtual bankrupts to still operating, “alive” companies. At the same time, unscrupulous debtors had time to withdraw assets, move abroad and take other measures that may further complicate debt collection. These shortcomings are also inherent in the moratorium introduced on 1 April.

With regard to the consequences of the moratorium in 2020, the forecasts did not come true: after the moratorium had been lifted, the number of bankruptcies initiated according to Fedresurs statistics slightly increased, compared to the pre-Covid period. This could have been facilitated not so much by the introduced moratorium, but by other measures introduced to support business, including by the banks. Whether the situation at the end of 2022 will be similar to the year 2020 is still difficult to predict.