1.3 Types of bankruptcy:

Fictitious bankruptcy - knowingly false announcement by the owner or manager of a commercial organization, as well as individual entrepreneur about his insolvency to mislead the creditors to receive deferred or instalment payments due to creditors and debt discounts, as well as for non-payment of debts.

If this act has caused major damage - punishable by a fine of one hundred thousand to three hundred thousand rubles or the salary or other income for the period from one year to two years or imprisonment for up to six years with a fine of up to eighty thousand rubles or the salary or other income for the period up to six months, or without it. If the debtor’s application is filed by the debtor to court if it has the possibility to satisfy claims of creditors in full or the debtor has not taken steps to challenge the unfounded claims of the applicant, the debtor shall be liable to creditors for losses caused by the excitation of a bankruptcy case or unreasonable recognition of creditors' claims. ³

Deliberate bankruptcy (Premeditated bankruptcy) - the intentional creation or increase of insolvency committed by the manager or owner of a commercial organization, as well as the individual entrepreneur in his own interests or the interests of other persons, causing major damage.

To illegal actions of the debtor or the owner of the debtor enterprise include the action taken in foreseeing insolvency (bankruptcy) of enterprises and detrimental to the interests of all or part of creditors, such as:

-hiding of the property of the debtor or its liabilities; -hiding, destruction, falsification of any record, associated with the implementation of the debtor; -destruction or rejection of the necessary entries in the accounting records; -destruction, selling or introduction of a pledge of the debtor's property obtained on credit and not paid.⁴

For obvious reasons of bankruptcy, do not depend on the will and actions of individuals, companies and governments include the natural disasters and other unfavourable effects of natural and economic regularities, such as cycles and crises. However, it is clear that their effect is not absolute, of course leading the company into bankruptcy. The possibility of overcoming the crisis, recovery of the company depends largely on the effectiveness of the organization of its activities, the accumulated reserves and regular, appropriate atmosphere of management action.

Subjective reasons of bankruptcy include false , coming from an incorrect evaluation of the situation of company’s management. If you treat people, their groups and organizations (including government) as the subjects of economic relations, the insolvency to subjective reasons, some companies may include such actions, such as governments, which are aimed at achieving the public good, but it can cause failure of individual business entities.

Under the common causes of bankruptcy should be understood those which apply to all business entities in a market economy, immanent in to her due to the nature of the market, its spontaneity and the risk of entrepreneurship.

At the same time, except for the market, primarily open non-market can function, mostly closed socio-economic system, which for a long time prevailed in the territories. The main characteristics of this system are: nationalization of the economy, a high degree of concentration of production, militarization and monopolization of the economy overall deficit, inflation is suppressed, hidden unemployment, the formation of community-based, paternalistic human psychology.

These features and some other specific phenomena arising from the transformation of the system, determine the objective existence of special reasons, which can cause failure of entrepreneurs.

There are also internal and external to the subject of business factors that affect its activity.⁵ External factors are the most dangerous due to the fact that the ability to influence them is minimal, and the consequences of their implementation can be devastating. The major ones include:

- economic factors (inflation, tax rates and bank loans, currency exchange rates, income levels, etc.); -political factors that caused by the actions and intentions of the central and local authorities and their relation to different economic sectors, regions, countries and ownership patterns, the presence of various interest groups in government and economic management; -market factors (demographic trends, product life cycles, competition, etc.); - technological factors that impact on the economy arising from scientific and technological progress;

-socio-cultural factors, covering such events and processes, as prevailing in the society customs and traditions, people's attitudes to work and wealth, levels of education, attitude toward private business and the possibility of self-employment -international factors associated with economic globalization, transnational companies, economic, military and political associations.

Domestic risk factors for occurrence of bankruptcy due to the wrong actions of management, as practice shows, the countries with developed market economies, are the causes of up to 80 percent of economic insolvency of companies. The main internal factors include institutional weaknesses in the creation of a business entity; excessively rapid expansion of business;

Complacency and lack of long-term vision of development, low qualifications of managerial staff, lack own capital, inefficient production and trade and investment, low level of technology used, technology and organization of production, inefficient use of resources, misallocation of profit.

Typically, one or even several reasons not lead an entrepreneur to bankruptcy spontaneously. Usually occurs due to the economic failure of a gradual, rather a long process of their interaction in the absence or insufficiency of attention paid to upper management of environmental threats and weaknesses of the company

Thus, the major causes of bankruptcy are: low efficiency of the mechanisms of adaptation of businesses to the changing external and internal environment, systems and management practices of financial and economic activity, environmental shocks, and specific economic conditions in the transformed economy.