Russia's insolvency overhaul prioritizes business recovery over liquidation
Russia's government has announced plans to overhaul its insolvency laws, aiming to shift from lengthy liquidations to business recovery. Economic Development Minister Maxim Reshetnikov revealed the reform on March 18, calling for a system that prioritises debt restructuring and pre-bankruptcy rehabilitation over asset stripping.
The current insolvency framework has long faced criticism for its inefficiency. In 2025, only 59 companies underwent rehabilitationâless than 1% of casesâwhile 6,477 were liquidated. On average, these proceedings dragged on for 1,265 days, with creditors recovering just 13.3% of their claims.
Efforts to reform the system have stalled before. In 2021, Prime Minister Mikhail Mishustin proposed a bill to expand rehabilitation measures, but it never reached a first reading. Support for change grew in October 2025, when Central Bank Governor Elvira Nabiullina backed the proposed reforms. The new plan seeks to streamline negotiations between creditors and business owners, avoiding formal bankruptcy where possible. Instead of dismantling companies, the focus will be on preserving operations and quickly returning assets to productive use. Procedures like supervision, financial recovery, and external management would be replaced by debt restructuring and competitive liquidation, with pre-bankruptcy rehabilitation as a key feature.
If implemented, the reform would mark a significant shift from liquidation-heavy insolvency processes. The goal is to reduce lengthy court battles and improve recovery rates for creditors. Officials have yet to release data on how many businesses could benefit or which sectors are most affected.
