Legal Status of Prior Creditors in Bankruptcy Cases of Entities

The significant disruptions in the economy over recent years have led to substantial growth in the application of insolvency (bankruptcy) proceedings in the Russian Federation, both in the sphere of corporate bankruptcies and individual bankruptcies. Violations of economic ties, commodity-money chains – all contribute to the increasing significance of the insolvency institution in modern societies. Simultaneously, the widespread use of insolvency norms clearly highlights, for us as researchers, the legal implementation issues that the research community should address. In our view, the most pressing issue is the apparent inefficiency of bankruptcy procedures. Contrary to the established approach of examining insolvency issues through the lens of bankruptcy procedures, we have attempted to consider the bankruptcy institution problem through the lens of the legal position of creditors, as fundamental subjects of any insolvency relationship. Since the relevance of the study primarily relies on the level of economic entities rather than "consumer" bankruptcy, we have tried to examine the issues of the legal position of creditors in cases of corporate bankruptcies. We have identified problems that impede creditor’s exercise of their rights and protection of their legitimate interests, found correlations between the inefficiency of bankruptcy procedures and the identified problems, and proposed our own solutions, including through modernizing the existing bankruptcy legislation. We anticipate that the proposed changes will alter the objective direction of the current bankruptcy legislation, which is aimed at protecting debtors, and will contribute to balancing the subjects of insolvency relationships.