Participation in bankruptcy as a way to enter the Belarusian business
Bankruptcy is traditionally perceived as the final chapter in a company's history. However, in practice, it often becomes a starting point for a new business or a restart of an existing company under the control of a new investor. For foreign investors, bankruptcy proceedings in the Republic of Belarus are particularly interesting as a legal and relatively inexpensive way to enter the Belarusian market.
According to the Department for sanation and bankruptcy of the Ministry of economy of the Republic of Belarus, 668 bankruptcy cases were opened in Belarus in the first three quarters of 2025, of which 41.9% were bankruptcies of trading companies, and the remaining 59.1% were bankruptcies in other sectors: industry, agriculture, construction, and others. Such companies usually have assets, ranging from goods in circulation to production sites, as well as human resources familiar with the specifics of the particular company's activities. All of this could be of interest to investors, but as a rule the direct acquisition of a troubled company outside of bankruptcy does not attract investors due to the need to repay debts and interact with creditors. However, if the target company is already in bankruptcy proceedings, these risks are largely structured by law, which opens up additional opportunities for investors.
Let's figure out how participating in the bankruptcy of Belarusian companies can be the start of your business in Belarus.
About bankruptcy procedures in Belarus
Since October 1, 2023, a new law dated December 13, 2022, No. 227-Z, “On insolvency resolution” (hereinafter referred to as the Law “On insolvency”) has been in force in Belarus.
The Law “On insolvency” provides that a debtor may be recognized (Article 1 of the Law “On insolvency”):
a) as bankrupt with the opening of liquidation proceedings;
b) as insolvent with the introduction of reorganization proceedings (hereinafter referred to as bankruptcy).
Information on the location of companies in bankruptcy or insolvency is posted in the
Unified State Register of Bankruptcy Information (hereinafter referred to as the Register) on the website https://bankrot.gov.by. Information on the progress of proceedings in the case, the property of debtors, etc. is also posted there.
Bankruptcy can be used as a way to enter into business in any of the above procedures. Let's consider how this can be done.
Option 1. Purchasing of the bankrupt company's assets
In this case, the investor does not acquire corporate rights (shares or stocks), but purchases certain assets of the bankrupt company. In economic terms, this is a classic distressed asset transaction.
The sale of a bankrupt company's assets may take place at various stages of bankruptcy proceedings: during reorganization (Article 113 of the Law “On insolvency”) or liquidation (Article 91 of the Law “On insolvency”).
The sale of assets is usually carried out at auction, except in the following cases (clause 3 of Article 91 of the Law “On insolvency”):
- if the value of the assets that is the subject of the transaction or related transactions does not exceed 100 basic units (BU);
For reference
The size of the BU in 2026 is 45 Belarusian rubles, i.e., the total amount is 4,500 Belarusian rubles (around 1,600 USD).
- if the products sold were manufactured by the debtor in the course of its business;
- if the products are perishable or other property at risk of significant depreciation.
There are some special features regarding the sale of assets belonging to a bankrupt agricultural organization, as well as a debtor's company registered as a property complex.
The sale of the debtor's assets is carried out at auction in the form of an electronic auction, and the sale of the debtor's company and the property of an agricultural organization is carried out in the form of an electronic auction, auction, and/or tender (clause 4 of Article 91 of the Law “On insolvency”).
Auctions are open, except in cases of sale of the debtor's assets with limited marketability, which may only be sold at closed auctions (these include, for example, toxic chemicals) (clause 7 of Article 91 of the Law “On insolvency”) (clause 7 of Article 91 of the Law “On insolvency”).
Where is information about the sale of bankrupt companies' assets available?
Information about direct sales of assets can be found on the website https://bankrot.gov.by in the “Property” section, and information about auctions can be found in the “Publications” section.
There are also other platforms where announcements about the sale of property (through auctions and other means) of bankrupt companies are posted. The most popular of these are:
- https://e-auction.by/bankrot/;
- https://ipmtorgi.by/auctions/.
How to participate in the auction?
First, you'll need to contact the auction organizer and register to take part in the auction according to their rules.
To take part in the auction, you'll need to pay a deposit of no more than 20% of the starting price of the assets disposed for sale (clause 18, article 91 of the Law “On insolvency”) If you win the auction, the deposit will be credited towards the payment for the purchased assets (clause 2 of Article 94 of the Law “On insolvency”)) and the deposit will be returned to other auction participants (clause 41 of Article 91 of the Law “On insolvency”). The deposit is not returned to the winner only if the auction was canceled: for example, the winner avoided concluding the contract, did not pay for the purchased items, etc. (clause 3 of Article 94 of the Law “On insolvency”).
To purchase assets sold by direct sale, you must contact the crisis manager and agree on the terms of purchase of the assets you are interested in.
Advantages of Option 1:
- no transfer of the bankrupt company's debts to the buyer;
- high degree of legal protection for the transaction;
- opportunity to acquire assets at a significant discount.
Disadvantages of Option 1:
- you only receive the means to run a business; to operate fully in Belarus, you will need to create a “legal shell” for the purchased assets;
- it is impossible to automatically preserve the corporate structure and contractual relationships;
- the risk of losing intangible assets and employees (additional HR costs will be required to attract employees).
Option 2. Buying shares/stocks in a bankrupt company.
Bankruptcy laws don't directly forbid selling shares or stocks in a company that's going through bankruptcy. This mechanism is often used to attract investors to companies with state ownership: the state sells its shares/stocks, and the investor undertakes to invest funds in the enterprise, pay off its debts, retain employees, etc., and in return receives an enterprise with a workforce.
The main advantage of this option is the opportunity to buy an operating enterprise with staff, licenses, and business connections at a discounted price.
Unlike the purchase of property, when purchasing shares (stocks), the investor effectively joins the existing company. All of the existing obligations remain with the legal entity, including debts to creditors. Therefore, such transactions are usually accompanied by obligations to the state to repay debts, financially restructure the enterprise, and preserve jobs. Often, such transactions are accompanied by the conclusion of amicable agreement with creditors.
What is the procedure for purchasing shares (stocks) in a bankrupt company?
The procedure for acquiring shares (stocks) in a bankrupt company depends on the organizational and legal form of the company, as well as on who owns the shares/stocks: the state or a private individual.
If the company is a joint-stock company (closed joint-stock company or open joint-stock company), the procedure for selling its stocks depends on who owns them: the state or a private individual.
If the owner of the stocks is the state, the person interested in purchasing them must apply to the State Committee on Property (if the owner is the Republic of Belarus) or to the local executive committee (if the owner is an administrative-territorial unit).
Next, documents are prepared for the President's order, and an auction or tender is held for the sale of stocks.
If the owner of the stocks is a private individual, the procedure for selling stocks depends on the type of joint-stock company: closed joint-stock company (CJSC) or open joint-stock company (OJSC).
If the company is a CJSC, then a stock purchase agreement is concluded and registered by the depositary. After that, the stocks are credited to the new owner's account. When selling CJSC stocks, it is also necessary to observe the underlying right of other stockholders to purchase stocks, if provided for in the charter.
If the company is a OJSC, then the sale of stocks is organized on the stock exchange through a broker.
If the company is a limited liability company (LLC) or an additional liability company (ALC), direct sale of shares in the share capital becomes impossible due to the fact that in case of a change in the shareholding structure of the LLC or ALC, it is necessary to amend the company's charter and register the amendments within two months from the date of the change in membership (clause 22 of the Regulation on State Registration of Economic Entities, approved by Decree of the President of the Republic of Belarus No. 1 dated January 16, 2009).
Amendments to the charter of any economic entity fall within the exclusive competence of the general meeting of shareholders (clause 2, part 1, Article 34 of the Law of the Republic of Belarus dated December 9, 1992, No. 2020-XII “On business entities”).
From the date of starting bankruptcy proceedings, the powers of the debtor’s management bodies (including the general meeting of shareholders) are suspended (subparagraph 1.2 of paragraph 1 of Article 103 of the Law “On insolvency”).
Thus, LLCs or ALCs that are in bankruptcy are unable to fulfill their obligation to amend their charter in connection with a change in the membership.
A possible option for purchasing shares in the share capital of an LLC or ALC may be to conclude an amicable agreement with creditors, in which the future owner of the shares will participate (clause 6 of Article 131 of the Law “On insolvency”) and the subsequent sale of the share after the approval of the amicable agreement and the termination of the bankruptcy proceedings (Article 134 of the Law “On insolvency”).
Summary
For foreign investors, participation in the bankruptcy of Belarusian companies can be an effective tool for entering the Belarusian market. Depending on the objectives and acceptable level of risk, there are two main options:
A) classic distressed assets deal through acquiring the assets of a bankrupt company at auction or through a direct sale – a faster and legally safer option that does not involve taking on debt but requires starting a new business from scratch;
B) distressed M&A-deal through acquiring shares/stocks in the share capital of a bankrupt company – a more complex mechanism involving debt obligations which allows to acquire a ready-made enterprise.
Choosing the optimal model requires a detailed legal and financial analysis of the specific project. In practice, the support of such transactions by specialists in bankruptcy and investment law allows for a significant reduction in risks and increases the investment attractiveness of the project.
Authors:
Yuliya Stsefanovich
Associate at GRATA International Belarus
Violetta Liudchyk
Аssociate at GRATA International Belarus, co-head M&A and Corporate Law practice
