The kremlin Is Preparing russia for a Wave of Corporate Bankruptcies

The rf’s state duma approved a sweeping corporate bankruptcy reform in its second reading, which is intended to replace the liquidation of companies with debt restructuring mechanisms. Formally, the law is aimed at preserving businesses, jobs, and tax revenues; however, its hasty passage coincided with a sharp deterioration in the financial condition of russian companies.

Authorities have effectively acknowledged the failure of the current system: in 2025, external administration was applied in only 51 cases, financial rehabilitation – in only eight, and rehabilitation procedures accounted for less than 1% of all corporate bankruptcies. The vast majority of cases ended with the sale of assets and final liquidation of companies.

The reform introduces a separate restructuring procedure, allows for pre-litigation agreements with creditors, and enables the approval of debt repayment plans. Debtors will be restricted from taking out new loans and entering into agreements with affiliated entities without the consent of the crisis manager or creditors. A new mechanism for the sale of large assets with flexible price adjustments is also being introduced.

The rush to consider the draft law coincided with the escalating debt crisis in the rf’s corporate sector. As of the end of April 2026, russian companies’ liabilities had reached 293 trillion rubles (about $3.85 trillion), while overdue payments for the year had risen by 18%, to 7 trillion rubles (approximately $92 billion). Some companies are already rolling over old debts with new loans, while servicing interest alone accounts for about 37% of their profits.

The adoption of this reform is the kremlin’s preparation for a wave of insolvencies amid high interest rates, falling profits, and widespread defaults. The new mechanisms will make it possible to postpone the bankruptcies of large enterprises and prevent a simultaneous flood of distressed assets onto the market. Most likely, moscow will apply them selectively, first of all to companies in the defense sector, critical infrastructure, major employers, and companies dependent on government contracts.