Subject. The terms, such as Bankruptcy and Insolvency, are used in various regulatory documents of the Russian Federation. The protracted economic crisis due to the pandemic urges to solve disputable issues and improve the legal framework of the business bankruptcy procedure. Objectives. The study provides a rationale for formulating standalone paradigms for bankruptcy and insolvency for scientific and practical purposes, aligning development phases of the national institution of bankruptcy. Methods. The study relies upon general and partial methods of research. Based on the retrospective analysis, we sorted evolutionary phases of bankruptcy as a national institution. Conducting a comparative analysis, we inferred the inequality of the two synonymous concepts. Results. Based on the comprehensive approach to dealing with disputable issues, we provided a rationale for diverging bankruptcy and insolvency. We believe that the reconstruction should start with the renaming of the respective federal regulation, being followed by developing its content. We analyzed various approaches to comparing insolvency and bankruptcy, spotlighted development milestones of the national legislation and presented our own vision of the origination of bankruptcy as a national institution, pointing out five phases and naming each of them. Conclusions and Relevance. The term Bankrupt is of European origin and came to Russia during the reign of Peter the Great. Currently, the terms Bankruptcy and Insolvency permeate not only the lexicon of the professional community of economists and lawyers, but also ordinary people. We conclude it would be reasonable to diverge bankruptcy and insolvency at the paradigmatic level, which will contribute to the improvement and development of modern scientific views and practices of professionals in economics and law. The system of the bankruptcy development as a national institution is intended to sort out scientific ideas of its historical process. The ideas herein are designated to set up a modern paradigm of bankruptcy and insolvency, and improve the legislative framework. Therefore, the conclusions and suggestions can be of scientific and practical use in economics and law, as well as in higher education.
Keywords: bankruptcy, insolvency, history of the national institution, modern paradigm, legislation, improvement
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