Russian Corporate Bankruptcies Drop 24% in 2025

Corporate bankruptcies in Russia experienced a significant decline in 2025, dropping by 24% year-over-year. According to official data, a total of 6,500 legal entities were declared insolvent during the year.

This downward trend reflects shifting dynamics in the Russian business landscape, where the costs and complexities of bankruptcy proceedings are increasingly outweighing the potential benefits for both debtors and creditors. The data reveals a market where formal insolvency is becoming less common, while alternative solutions remain underutilized.

The 24% year-over-year decrease in corporate bankruptcies marks a notable shift in the Russian economic environment. The total number of 6,500 insolvent legal entities represents the lowest figure in recent years, signaling a change in how businesses approach financial distress.

Experts point to several interconnected factors driving this trend. The primary driver is the increasing cost of bankruptcy procedures, which has made the process less accessible for many struggling companies. Simultaneously, there has been a decline in creditor interest, as financial institutions and other claimants find that the potential recovery from bankrupt debtors is often insufficient to justify the time and expense of legal proceedings.

The data suggests that many creditors are choosing to write off bad debts rather than pursue lengthy and costly bankruptcy litigation. This shift in strategy has created a situation where fewer companies are formally declared insolvent, even if their financial health remains precarious.

Despite the overall decline in bankruptcy filings, the data reveals a concerning trend in how these cases are resolved. Recovery procedures—which aim to restore a company's solvency rather than liquidate its assets—account for less than 1% of all bankruptcy cases in 2025.

Out of the 6,500 declared insolvent entities, only 59 cases involved recovery procedures. This extremely low percentage indicates that the Russian bankruptcy system is heavily weighted toward liquidation rather than rehabilitation. For most struggling companies, the path to insolvency ends with asset sales and closure rather than financial restructuring.

The rarity of recovery procedures highlights a systemic gap in the current legal framework. While bankruptcy laws exist to provide a structured exit from financial distress, the mechanisms for business revival remain underdeveloped and rarely utilized. This imbalance suggests that many potentially viable businesses are being liquidated when they might otherwise be saved through proper restructuring.

The changing landscape of corporate bankruptcies reflects evolving market dynamics and strategic decisions by creditors. Financial institutions and other claimants are increasingly conducting cost-benefit analyses before initiating bankruptcy proceedings against debtors.

The rising cost of bankruptcy procedures has created a threshold effect, where only cases with substantial potential recovery justify the investment of time and resources. For smaller debts or companies with limited assets, creditors often prefer to negotiate settlements outside of formal bankruptcy or simply write off the debt entirely.

This shift has several implications for the Russian business environment:

• Reduced pressure on struggling companies to resolve financial issues quickly
• Increased reliance on informal negotiations between debtors and creditors
• Potential accumulation of "zombie" companies that remain technically solvent but financially distressed
• Decreased transparency in corporate financial health reporting

The trend also suggests that the bankruptcy system may be failing to serve its intended purpose of efficiently reallocating capital and resources from failed businesses to productive uses.

Recognizing these challenges, the Ministry of Economic Development has announced plans to reform bankruptcy legislation. The ministry aims to address the declining number of corporate bankruptcies and the near-absence of recovery procedures through comprehensive legal changes.

The proposed reforms are expected to focus on several key areas:

• Reducing the cost and complexity of bankruptcy procedures
• Creating stronger incentives for creditors to pursue claims
• Expanding the use of recovery and restructuring mechanisms
• Improving the efficiency of bankruptcy administration

The ministry's initiative reflects a recognition that the current system may be discouraging necessary business restructuring and potentially allowing financial problems to accumulate rather than be resolved. By making bankruptcy more accessible and effective, the government hopes to create a healthier business environment where failed companies can be efficiently restructured or liquidated, and viable businesses can recover from temporary financial distress.

The 24% decline in corporate bankruptcies represents more than just a statistical change—it signals a fundamental shift in how Russian businesses and creditors approach financial distress. While the immediate effect is fewer formal insolvencies, the long-term implications for market efficiency and capital allocation remain uncertain.

The Ministry of Economic Development's planned reforms will be closely watched by market participants. Success in reviving recovery procedures and making bankruptcy more accessible could lead to a healthier business environment where financial problems are addressed promptly and efficiently. However, if the current trends continue, Russia may see an accumulation of distressed companies that remain in limbo—neither solvent enough to operate normally nor bankrupt enough to exit the market.

For now, the data from 2025 paints a picture of a market in transition, where traditional bankruptcy mechanisms are being reconsidered and reformed to better serve the needs of the modern Russian economy.