THE ORDER OF CREDITORS' CLAIMS IN BANKRUPTCY: INCONSISTENCY BETWEEN LEGAL AND ACCOUNTING MODELS

Abstract

Introduction. Legal regulation of bankruptcy procedures operates with the category of creditor claims with a specific priority of satisfaction, while accounting reflects liabilities as an economic value of debt. At first glance, these are two descriptions of the same phenomenon, but in reality, they are two conceptually different objects with different sets of attributes. The register of creditors' claims, which is the central document of bankruptcy proceedings, is actually formed outside the accounting system, which creates information asymmetry between the participants in the procedure and increases the likelihood of errors in the classification of priority. This problem is conceptual rather than technical in nature and requires theoretical justification.

Purpose. The purpose of the study is to identify and theoretically substantiate the conceptual inconsistency between the legal model of creditors' claims and the accounting model of liabilities in bankruptcy proceedings, to determine its structural consequences and to formulate requirements for the accounting information system in conditions of insolvency.

Materials and methods. The information base of the study consists of the provisions of the Code of Ukraine on Bankruptcy Procedures, National Accounting Regulations (Standards), the Conceptual Framework for Financial Reporting of the IASB, as well as works by domestic and foreign authors in the field of bankruptcy law and accounting theory. The study uses comparative analysis methods (to compare the attributes of legal and accounting models); structural-functional methods (to identify differences between information regimes of activity and insolvency); the criterion analysis method (to develop a criterion of information sufficiency); the inductive method (to derive theoretical propositions from identified structural inconsistencies); the modelling method (to construct a diagram of relationships between model inconsistencies and their consequences).

Results. The non-identity of accounting and legal regulation objects is substantiated. The legal model of a claim includes four parameters: the amount of debt, the identification of the creditor, the legal nature of the claim, and the order of satisfaction. Meanwhile, the accounting model of a liability, based on the assumption of continuity of operations, reflects only the first two. It is argued that insolvency procedures form a qualitatively different information regime, in which accounting data acquires evidentiary value, but structurally does not contain the characteristics necessary to determine the creditor's place in the hierarchy of satisfaction of claims. A criterion of informational sufficiency of accounting for bankruptcy procedures is proposed. According to this criterion, the current system is structurally insufficient in terms of reflecting the priority of a claim and the signs of its security. Three groups of structurally determined consequences of non-compliance have been identified: operational, legal and behavioural. They have a common structural cause and cannot be eliminated by specific technical adjustments.

Discussion. Further research should focus on the transition from theoretical justification to methodological implementation of the formulated requirements for the accounting system. This includes developing a system of sub-accounts to reflect priority and security attributes, designing a form of creditor claims register as a derivative of accounting data, and conducting a comparative analysis of foreign approaches to regulatory accounting in insolvency with a view to adapting them to the domestic legal system.