Business Bankruptcies in Russia: Risks and Tendencies

According to cross-statistical analyses by Seldon (a Russian Big Data firm), bankruptcies of individual entrepreneurs (IP) during the period January-August 2020 increased by 33.7% y-o-y. By the end of 2020, over 22’000 IP might be insolvent.

The latest increase in IP bankruptcies fits however in a long-term trend, reflecting regulatory specificities introduced in 2015: IPs use actively the facilitated bankruptcy rules or bankrupt not as IPs but as private persons after notifying of the IP’s secession of activities.

Surprisingly, legal entities (LLC etc.) bankrupt 23.8% less y-o-y for the same period. But this too reflects a prior trend existing since 2017. The stronger decrease this year is due to bankruptcy procedures that look particularly costly in times of crisis and recovery chances considered to be even lower than usual, dissuading creditors to undertake legal steps.

Over half of bankruptcies are in 3 sectors: retail, construction, real estate.

Bellerage provides counterparty verification services and can help you minimize the risks associated with doing business in Russia. You can contact us by writing to russia@bellerage.com.