What you need to know about rehabilitation procedure

A rehabilitation procedure is a judicial procedure applied to a temporarily insolvent debtor (a legal entity or an individual entrepreneur) in order to restore their solvency and preserve business operations. The main goal of the procedure is the financial recovery of the business, the preservation of jobs, and structured settlements with creditors.

Grounds for Filing with the Court:

The debtor's temporary insolvency serves as the basis for applying to the court with a petition for the application of a rehabilitation procedure.

A debtor is recognized as temporarily insolvent in the presence of overdue obligations:

• Over 3 months — regarding obligations to employees (payment of wages and compensation), social contributions, mandatory social health insurance (MSHI) contributions, mandatory pension contributions, as well as compensation for harm to life and health and alimony obligations.

• Over 4 months — to other creditors (including bank loans, microcredits, supplies of goods/services) and tax liabilities.

Important: The legislation introduces restrictions on fictitious procedures. The court will refuse to initiate rehabilitation if the debtor attempts to initiate the procedure in the absence of creditors other than tax authorities, or for the purpose of evading the fulfillment of obligations.