Abstract: The article presents the results of a critical analysis of identified in scientific literature positions and legal practice of sanation as a basic tool for economic rehabilitation of an enterprise. The author emphasizes the interpretation of sanation in all its varieties as a legal procedure that requires judicial proceedings. The specifics of the implementation of judicial and out-of-court sanation of troubled companies are considered. Recognized obvious benefits of out-of-court sanation for the debtor include retention of the current owner’s control over the company, time saving for more efficient and complete implementation of rehabilitation procedures, preservation of independence for the company, potentially unlimited terms of implementation, possibility to discharge bad tax debts, right to segregate its creditors and lower cost of legal regulation.The article reveals the unsatisfactory scale of application of insolvent companies’ rehabilitation processes in Ukraine and offers explanations for this. It is recognized that all types of sanation require a troubled company to take a proactive stance in dealing with its creditors, counterparties and state authorities. The factors and criteria for the feasibility of sanation are suggested. The feasibility of rehabilitation requires an insolvent company to have recovery potential and a convincing restructuring concept also as a restoration plan consistent with it. The recovery potential requires encouraging prospects for the target market, relevance of company’s product portfolio, importance of the enterprise for national security and society, image of a manufacturer of quality products, availability of relevant production facilities, own research and development base, availability of the core staff, consolidation of owners, constructive attitude of key creditors.