Bankruptcy procedures : winding up.

If the court determines that the debtor's solvency cannot be restored, it declares the debtor bankrupt and liquidates it. As soon as this decision is made, all of the debtor's monetary obligations become due and payable, interest stops accruing, and a court-appointed receiver must take measures to return assets held by third parties. The debtor's assets comprise the bankruptcy estate which is used to satisfy creditors' claims.

During bankruptcy proceedings, creditors' claims are ranked in three categories. Claims of each category cannot be satisfied until the claims from the previous categories are satisfied in full. If there are not enough assets to satisfy all creditors of one priority, payments are made on a pro rata basis. Court expenses, remuneration to bankruptcy managers, on-going expenses, creditors' claims that arose after the filing of the bankruptcy petition, and other expenses associated with the bankruptcy liquidation of the debtor are satisfied ahead of any other claims. Other claims are satisfied in the following order:

- claims from individuals for personal injury or moral damages;
- claims from employees for severance payment, wage and royalties;
- other claims.

Taxes and duties payable to governmental bodies of the Russian Federation that were due prior to the filing of the bankruptcy petition are considered to be the third priority claims. Creditors whose claims are secured with pledge(s) over the debtor's assets enjoy priority over other creditors in satisfying their claims from the proceeds of the sale of pledged assets, except for those creditors of first and second priority whose claims originated prior to the execution of the relevant pledge agreements.