Recovery of Debts from the Property of a Personal Enterprise in Bankruptcy and its Owner
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Abstract
Successful execution of judgments shows the overall level of system of protection of infringed personal rights. Moreover, execution of monetary judgments is important not only for the rating of effectiveness of system of justice, but also for the proper functioning of the economical system of the state.
Bankruptcy is a regular phenomenon of market economy, stimulating the vitality and consistency of trade relations. Every businessman who is acting fair under the circumstances of intense competition and who, acting as such, has become an insolvent debtor, can reasonably expect, that the burden of debt will not weight on him/her lifelong, and that after the insolvency proceedings he/she will be able to participate in the economic life again.
Final purpose of bankruptcy proceedings is similar to that of execution of judgments – to settle accounts with creditors. Both procedures however have their own important singularities that determine necessary differences in their legal regulation.
Particularities of civil liability of personal enterprise distinguish the personal enterprise from other legal persons. Personal enterprise is a legal person of unlimited liability, which means that in case if property of personal enterprise is insufficient to carry out obligations, the owner of such enterprise is personally responsible for the debts. If bankruptcy proceedings for the personal enterprise are started, subject of civil (pecuniary) liability, next to the personal enterprise, is its owner. However, the owner of personal enterprise, as a natural person, is also responsible for his/her personal obligations. It means that the situation, when the same individual is responsible for the obligations of personal enterprise and his/her personal obligations, necessarily occurs. Although such model of civil liability by itself does not raise any problems, due to different legal regulation of bankruptcy and execution procedures, conflict of laws is not avoided. In consequence of certain gaps in the legal regulation, solution of the mentioned conflict is not always an easy task.
Article deals with some problematic issues of recovery of debts from the property of a personal enterprise in bankruptcy and its owner, in particular with relation between the norms of Code of Civil Procedure, regulating the execution of judgments, and norms of Law on Bankruptcy of Enterprises as well as particularities of status of owner of personal enterprise as the subject of dual civil liability. The author concludes that it is necessary to amend the norms of Law on Bankruptcy of Enterprises, which prevent personal creditors of the owner to take part in the bankruptcy proceedings of a personal enterprise. The sequence of satisfying the creditors claims set in the mentioned law should be amended accordingly.
When the insolvency proceedings of a personal enterprise are finished, the right of enterprise creditors to demand the discharge of liabilities and obligations from the enterprise terminates. However, personal creditors of the owner of personal enterprise, taking part in the bankruptcy proceedings, may continue the recovery of debts from the owner according to the norms of Code of Civil procedure, regulating the execution process.
Bankruptcy is a regular phenomenon of market economy, stimulating the vitality and consistency of trade relations. Every businessman who is acting fair under the circumstances of intense competition and who, acting as such, has become an insolvent debtor, can reasonably expect, that the burden of debt will not weight on him/her lifelong, and that after the insolvency proceedings he/she will be able to participate in the economic life again.
Final purpose of bankruptcy proceedings is similar to that of execution of judgments – to settle accounts with creditors. Both procedures however have their own important singularities that determine necessary differences in their legal regulation.
Particularities of civil liability of personal enterprise distinguish the personal enterprise from other legal persons. Personal enterprise is a legal person of unlimited liability, which means that in case if property of personal enterprise is insufficient to carry out obligations, the owner of such enterprise is personally responsible for the debts. If bankruptcy proceedings for the personal enterprise are started, subject of civil (pecuniary) liability, next to the personal enterprise, is its owner. However, the owner of personal enterprise, as a natural person, is also responsible for his/her personal obligations. It means that the situation, when the same individual is responsible for the obligations of personal enterprise and his/her personal obligations, necessarily occurs. Although such model of civil liability by itself does not raise any problems, due to different legal regulation of bankruptcy and execution procedures, conflict of laws is not avoided. In consequence of certain gaps in the legal regulation, solution of the mentioned conflict is not always an easy task.
Article deals with some problematic issues of recovery of debts from the property of a personal enterprise in bankruptcy and its owner, in particular with relation between the norms of Code of Civil Procedure, regulating the execution of judgments, and norms of Law on Bankruptcy of Enterprises as well as particularities of status of owner of personal enterprise as the subject of dual civil liability. The author concludes that it is necessary to amend the norms of Law on Bankruptcy of Enterprises, which prevent personal creditors of the owner to take part in the bankruptcy proceedings of a personal enterprise. The sequence of satisfying the creditors claims set in the mentioned law should be amended accordingly.
When the insolvency proceedings of a personal enterprise are finished, the right of enterprise creditors to demand the discharge of liabilities and obligations from the enterprise terminates. However, personal creditors of the owner of personal enterprise, taking part in the bankruptcy proceedings, may continue the recovery of debts from the owner according to the norms of Code of Civil procedure, regulating the execution process.
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Authors retain copyright of their work, with first publication rights granted to the Association for Learning Technology.
Please see Copyright and Licence Agreement for further details.
