13% of State Firms Face Bankruptcy, Soviets Say : Reform: The shift to a free market is cited. The nation’s first bankruptcy law gets preliminary OK.

About 13% of the Soviet Union’s state-owned enterprises are likely to go bankrupt in the next year as the country moves from a centrally planned to a free-market economy, lawmakers were told Monday as they gave preliminary approval to the country’s first bankruptcy law.

Vladimir I. Shcherbakov, the first deputy prime minister overseeing the country’s economic reforms, told the shocked lawmakers that poorly managed companies are draining huge amounts from the state and need to be forced out of business.

“Those who enter a market should be fully responsible for themselves and should not hide behind the state’s back,” Shcherbakov told the Supreme Soviet, the national legislature. “It is better to lose 5% of our (industrial) output and to serve notice to everyone that a market is no laughing matter.”

The lawmakers nonetheless approved the bill, 343 to 5, as a key part of President Mikhail S. Gorbachev’s economic reform program.

Although long planned, the legislation was held up until the new program for placing the unemployed began operating last week and other laws, including those for the privatization of state enterprises and foreign investment, were approved.

Under the bankruptcy legislation, firms unable to pay their bills can be forced out of business after a three-month period by the enterprises that they owe or the banks that have lent to them. Insolvent companies can also petition the courts that will be established to hear bankruptcy cases.

As in the West, companies can propose a settlement of the cases against them and negotiate with their creditors for delayed and partial payments.

Up to now, Soviet enterprises unable to pay their suppliers, meet their payrolls or finance capital expenditures have generally drawn money from a branch of the state banking system in a long-term, low-interest loan or have had their losses covered by their parent government ministry.

The bill envisages continued subsidies, however, for enterprises such as those in the food-processing industry that lose money because state-set prices do not cover their production costs.

There are about 47,000 state-owned enterprises in the Soviet Union, and officials said that those most likely to go out of business over the next year constitute 3% to 5% of the country’s present industrial output.

In other action, the Supreme Soviet rejected Prime Minister Valentin S. Pavlov’s nomination of Konstantin Katushev, the foreign trade minister, to be a deputy prime minister for foreign economic relations--just as it had refused to confirm Stepan Sitaryan for the post earlier this year.

The post is regarded as a vital one because the appointee will oversee use of the massive economic assistance that Gorbachev is seeking from the West.

Katushev was accused by some liberal deputies of allowing his ministry’s officials to buy government-owned country houses at bargain prices; he rejected the allegations.