External management as an integral part of the bankruptcy procedure

Liquidation of an enterprise is considered an extreme step, used with complete bankruptcy, when there is nothing to help. However, before that, various measures are being taken to restore the solvency of the organization. Such measures include external management.

The decision to commence this procedure is taken by the arbitration court on the basis of a petition submitted by the creditors of the organization. The court also appoints an external manager, who is responsible not only for fulfilling obligations to creditors, but also for restoring solvency. As a rule, the maximum period during which external control is conducted is one and a half years. Then the responsible person provides a detailed report on the work performed, on the basis of which a decision is made either to extend the management, or to proceed to the next stage of the bankruptcy procedure. The initiator of this process can be the direct owner of the enterprise, directly declaring to the court that there are serious financial problems.

When external management begins in the event of bankruptcy, the head of the company is removed from office, and all powers are transferred to the appointed manager. He has the right to carry out restructuring of the enterprise, re-profiling and modernization. In addition, it can significantly reduce the staff, if it does not contradict the labor code. The manager has the right to be aware of the changes. All activities developed by the interim manager must meet the main objectives: meeting the requirements of counterparties and preventing the complete destruction of the firm. First of all, the collection of accounts receivable in full is carried out, then debts of increased importance are paid.

In addition, external management involves the regulation of the company's share capital. For example, you can increase it by raising the par value of each stock or their number. Appointed to the position of the person at his own discretion determines the procedure for the return of funds to creditors, holds a meeting of the directors of the enterprise and offers developed measures to improve the financial condition of the company.

In addition, the manager is responsible for the implementation of core activities, that is, he has the parallel right to enter into agreements with suppliers and contractors and continue to produce products or provide services. A month after the arbitration department appointed its person to the position of the head, the person in charge is obliged to provide a report on the planned innovations and results. In this document it is necessary to designate the time period after which, with the positive influence of all factors, the enterprise can be considered restored.

External management can be terminated either by a court decision when the bankruptcy commissioner is introduced, or at the conclusion of a peace agreement.